Not yet a March Madness, but spot rates are rising unchecked.
This week’s SONAR Pricing Power Index (PPI): 65 (up 5 points) – In the past week, the tender rejection rate remained above 13% while the average spot rate rose from $2.76/mile to $2.82/mile. The SONAR team also met with numerous customers with a range of perspectives whose comments added conviction to the view that the freight market is now in carriers’ favor. The truckload market tightness varies by region and is across trailing equipment types, with particular tightness in flatbed and other specializations, which appears to be supported by an improving industrial economy in areas outside of housing and automotive.
Three-month SONAR Pricing Power Index (PPI) Outlook: 70 (unchanged) – The 3-month freight market outlook remains unchanged, which calls for a continuation of recent market dynamics made more evident by additional freight demand during the often freight-rich early summer period. If Dalilah’s law, which just passed the House Transportation & Infrastructure Committee, were to be passed, it would increase my PPI outlook.
Tender rejection rates remain elevated
The national tender rejection rate across all equipment types (2026 – white line) is staying elevated after surging during Winter Storm Fern. (Chart: SONAR)
The national tender rejection is down 22 basis points in the past week, which is a negligible change that gives further evidence to the view that the freight market has fundamentally shifted from the recent period of looseness that lasted almost four years. It hit a mult-year high of 14.3% in the middle of Winter Storm Fern and defied many industry participants’ expectations by remaining near that elevated level ever since. Carriers had been rejecting 9.8% of tenders the week before Winter Storm Fern. The fact that tender rejection rates and spot rates have remained elevated suggests that carriers didn’t fully realize that the market had shifted to their favor until the winter storms served as an illustrative catalyst.
Tender rejection rates have been particularly high in specialized sectors. The flatbed market appears especially tight with a 34.5% rejection rate. That is down from 42% – flatbed is a thinner data set than dry van and reefer, so its rejection rates are more volatile. The improvement in the flatbed sector likely reflects a pickup in activity in the industrial economy. There have been two strong months in a row for the ISM industrial indexes, which include several forward-looking components. In addition, earlier this week, Western Class I railroad Union Pacific noted that its industrial traffic exceeded expectations in the first quarter, with volumes up 4% in 1Q.
The SONAR Truckload Rejection Index is shown above for dry van (white), reefer (green), and flatbed (red) segments. (Chart: SONAR)
Spot rates surge to new high
The average spot rate, displayed in the SONAR National Truckload Index (NTI.USA), surged following Winter Storm Fern, and has remained well above pre-storm levels. (Chart: SONAR)
The national average spot rate in the past week increased from of $2.76/mile to $2.82/mile. The latest spot rate is nearly at the year-to-date high. Spot rates are inclusive of fuel surcharges, so that may just reflect carriers’ pricing in a portion of their higher diesel costs. For comparison, before Winter Storm Fern, the average spot rate was around $2.55/mile, and one year ago, the average rate was around $2.40/mile. Overall, changes in spot rates in the six or seven weeks demonstrate that carriers have pricing power that they didn’t have in the past few years, outside of short-lived periods of temporary tightness such as holidays.
The national tender rejection rate (white) has shown to be a short-term leading indicator for the national spot rate (red). (Chart: SONAR)
Spot rates rising faster and further than contract rates have led to a collapse in the spread between the two. That leads to pressure on brokers’ margins and suggests that contract rates will soon be renegotiated higher. (Chart: SONAR)
Like spot rates, average contract rates also rose in the past week. Contract rates are now being negotiated at higher levels. The above chart shows dry van contract rates, excluding fuel surcharges. (Chart: SONAR)
Demand has picked up
Total truckload tender volume, which includes freight that is tendered for the first time as well as freight that has been rejected and re-tendered, picked up in the days surrounding Winter Storm Fern, and remains positive year over year. (Chart: SONAR)
The volume of accepted tenders has picked up of late. This chart understates total freight volume when compared to 2025 and 2024, because it does not include freight that falls through the routing guide and ultimately moves on the spot market. (Chart: SONAR)
About the SONAR PPI: The SONAR Pricing Power Index is a qualitative assessment of the balance of negotiating power between shippers and carriers on a scale of 0 to 100 using SONAR data and anecdotes from discussions with SONAR clients. The higher the number, the tighter the freight market and the more that pricing power favors carriers. A 50 represents a balanced market. While the SONAR PPI primarily pertains to the truckload sector, given its size, dynamics in other sectors, such as intermodal and ocean, are also considered.
