Chart of the Week: Outbound Tender Rejection Index – USA SONAR: OTRI.USA
National tender rejection rates (OTRI) jumped back over 5% this week as winter weather impacted nearly every section of the U.S.
While this probably doesn’t indicate the domestic trucking market is entering a more sustained period of tightness, it’s noteworthy that the market is responsive. This is simply the third time since October 2022 that the national OTRI has eclipsed the 5% threshold and the primary time it was not across the Christmas/Recent 12 months holiday week.
Spot rates (excluding fuel) also rose this past week, indicating carriers were in a position to charge more for ad hoc services. The National Truckload Index (Linehaul Only) bounced from $1.71 to $1.76 from Tuesday to Thursday.
Winter weather events should not latest to trucking, but ones that create nationwide disruption should not terribly common. Many of the attention from weather in trucking goes to the tropical systems that hit in the hotter seasons. These have develop into less disruptive through the years because the Federal Emergency Management Agency has develop into more efficient in handling its response and landfalling storms have hit fewer large population centers.
Winter weather events might be more disruptive than their warmer counterparts. A recent example of this was the polar front that crippled the energy grid in Texas in February 2021.
An unusually strong Arctic front pushed all of the strategy to the Gulf Coast, coating roads in ice and creating massive power outages that lasted nearly every week in areas that should not accustomed to one of these weather.
The domestic freight market was within the initial stages of stabilizing when the storm hit, and while this was not 100% applicable to the storm itself, the coincidence of tender rejection rates spiking because the storm hit is undeniable.
Besides questions of safety and making travel harder, winter systems create scheduling problems and backlogs. Shipping and receiving operations shut down when employees are unable to get to their facilities. Trucks need to either wait or travel in difficult conditions to a different pickup or to drop their trailers.
the SONAR Critical Events map showing temperature anomalies — how far above or below average the high temps are for Jan. 19 — the entire Eastern half of the U.S. was showing highs below average. The orange and red circles indicate the highest-risk areas of impact from the weather.
This pattern has been relatively persistent to begin the 12 months. A consistent train of systems dropping snow and ice has been hitting the Pacific Northwest, extreme cold hit a big portion of the Midwest, and significant wintry precipitation has hit the South.
a map of the Weighted Rejection Index on Wednesday, which mixes relative demand with weekly change in tender rejection rates, darker shades of blue indicate where probably the most significant increases in tender rejection rates have occurred. Note that they should not isolated to anyone region.
Carrier networks have obviously been impacted as markets like Savannah, Georgia, which have not had snow or ice are showing relatively strong holiday level rejection rate increases. Note they’re falling back quickly toward the top of the week.
Higher temperatures are within the forecast for the Eastern half of the country next week, which should help rejection rates fall. Rejection and spot rates don’t normally jump like this in January. This may very well be an early indication of a more volatile market in 2024, or at the very least one which has increased sensitivity as capability continues to erode.
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