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Chart of the Week: Outbound Tender Reject Index for dry van, refrigerated, and flatbed – USA SONAR: VOTRI.USA, ROTRI.USA, FOTRI.USA
Flatbed capability continues to be difficult to source over a yr after the truckload market collapsed for dry van and refrigerated freight. Tender rejection rates, the proportion of loads carriers are unable to cover for his or her customers, have moved below 3% for van (VOTRI) and refrigerated or reefer (ROTRI) loads while flatbed rejection rates jumped back over 17% this past week. Why is flatbed capability not following in trend with the opposite two trailer types?
Tis the season
Flatbed freight is amazingly seasonal and tends to have a powerful spring rebound in comparison with winter. Many drivers swap their flat trailers out for dry van or reefer trailers in the course of the colder and wetter months. When construction activity resumes within the spring, flatbed capability can sometimes be caught off guard within the transition.
Backlogged
Flatbed demand has a powerful connection to manufacturing as well. Automotive production stalled during 2020-21 amid supply chain bottlenecks. Semiconductors weren’t the one parts the automakers couldn’t get ahold of consistently. This led to backlogs with all of the OEMs and once consumer goods demand waned, it cleared the best way for other items to maneuver.
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The brand new orders component of the Institute for Supply Management (ISM) indices illustrates how latest orders — a number one indicator for freight — were coming in at all-time highs from July 2020 till Q3 2021. Subsequently backlogs of orders expanded at nearly an analogous pace throughout 2021.
Underserved
Flatbed rejection rates were well below van and refrigerated for many of the second half of 2020 and first half of 2021, a really unusual situation from a historical context. Flatbed capability tends to be as erratic as its demand, making it harder to secure generally. Van spot rates rarely exceed flatbed for that reason. Flatbed freight also tends to be more labor-intensive and specialized.
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With rates for general dry van freight (white) being consistent with flatbed (green) in the course of the heart of the pandemic in 2021, it possibly helped limit capability growth for this equipment type. This may be quite a bit just like the seasonal effect described above but on a bigger scale.
Flatbed capability does look like moving in the identical direction as the remainder of the truckload market over the long term, even in the event you include the recent tender rejection spike. Demand volatility can also be helping support spot rates as carriers struggle with the inconsistent flow of freight.
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The economy continues to be slowing. Real GDP growth only hit 1.6% this past quarter, with goods-adjusted GDP only reaching 0.62%. Housing starts and constructing permits are contracting from highs hit in early 2022.
While demand suffers from the identical long-term risks as the opposite two equipment types, the limitation of capability growth over the past few years would be the differentiator that keeps this mode of transportation out of the deepest depths of the freight recession.
Concerning the Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that gives an interesting data point to explain the state of the freight markets. A chart is chosen from hundreds of potential charts on SONAR to assist participants visualize the freight market in real time. Each week a Market Expert will post a chart, together with commentary, survive the front page. After that, the Chart of the Week shall be archived on FreightWaves.com for future reference.
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