Post-Holiday Surge Sets Stage for Summer in Freight Market
This week’s FreightWaves Supply Chain Pricing Power Index remains at 35, indicating favorable conditions for shippers. The FreightWaves SONAR data reveals significant trends in the freight market, particularly after the Memorial Day holiday, setting up a promising outlook for the summer season.
Post-Holiday Volume Increase
Freight volumes have seen a notable boost following the Memorial Day holiday, with the Outbound Tender Volume Index (OTVI) showing a 14.4% increase week over week. This post-holiday surge has pushed volume levels to a year-to-date high. While there is typically a decline after such holidays, a stabilization in the coming weeks could signal continued growth throughout the rest of the year.
Tender Rejection Rates Climb
The Contract Load Accepted Volume (CLAV) index also shows positive trends, with a 13.9% increase week over week. Despite this growth, the rise in tender rejection rates, now close to 5%, has moderated the overall increase in accepted loads. This indicates a shift towards a more balanced market as capacity tightens.
Consumer Spending Trends
Consumer spending, particularly in categories such as home improvement and furniture, has softened compared to last year. However, spending on services like entertainment and dining out remains strong. Amazon’s upcoming Prime Day in July is expected to boost online retail spending, potentially impacting freight volumes positively.
Market Dynamics and Regional Performance
A broader analysis of the 135 freight markets in the U.S. shows significant weekly volume increases in nearly all regions. Major markets like Atlanta, Dallas, and Southern California have experienced substantial growth, underscoring the overall health of the freight market as the summer shipping season kicks off.
Mode-Specific Insights
Both the dry van and reefer markets have seen volume increases. The dry van market, in particular, has experienced an 11.67% year-over-year growth, while the reefer market, despite challenges, is showing signs of recovery with a 3.19% increase over the past two weeks.
Capacity Trends and Rate Movements
The freight market continues to have ample capacity, but the upward trend in tender rejection rates suggests a move towards equilibrium. Over the past week, the Outbound Tender Reject Index (OTRI) rose to 4.79%, indicating increasing market reactivity to external factors and a potential tightening of capacity.
Spot and Contract Rate Analysis
Spot rates have remained relatively stable post-Memorial Day, with the National Truckload Index (NTI) increasing slightly to $2.31 per mile. Contract rates, while showing a slight decline over the past year, have stabilized, indicating a balanced market. The spread between spot and contract rates is narrowing, which could lead to tighter market conditions as carriers gain pricing momentum.
Looking Ahead
The current trends suggest a healthy freight market with potential for continued volume growth and rate stabilization. As carriers and shippers navigate these dynamics, maintaining a close watch on consumer spending patterns and regional performance will be crucial for strategic planning.
The post-holiday surge has set a positive tone for the summer, with indicators pointing towards a robust and balanced freight market. As capacity continues to tighten and volumes stabilize, both carriers and shippers can anticipate a dynamic yet promising season ahead.
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