Requests to move loads down 5% from two weeks ago
This week’s SONAR Pricing Power Index (PPI): 40 – The market slightly favors shippers, in general. That rating is unchanged from the prior report.
Three-month SONAR Pricing Power Index Outlook: 50 – The market may be in balance in three months, even with weak demand, since capacity declines around the holiday season and capacity tightness often persists in the early weeks of the new year. That rating is also unchanged from the previous report.
Demand soft to start 4Q
SONAR continues to tell the story of a freight market that is being held back by a lack of freight demand, as measured by tender volume. That’s true whether tender volume is just being looked at relative to the past two years – down 15.7% year over year and down 12.9% on a two-year stack – or whether the past several years are also considered. Tender volume did increase in the second half of August (up about 6.5% ahead of Labor Day, whereas a 2% increase would have been more typical) and again in mid-September, but it’s hard to not come to the conclustion that those were just driven by improvement from a very low level. It’s typical that tender volume declines to start a quarter, and the past week was no exception as overall tender volume declined 3% week over week; it’s also down 5% from its level two weeks ago.
A comprehensive measure of freight demand, the Outbound Tender Volume Index is shown for 2023, 2024, and 2025 in pink, green, and white, respectively. (Chart: SONAR)
Tender volume has been weaker than in the past several years. The Outbound Tender Volume Index is shown for 2019 (orange), 2020 (blue), 2021 (yellow), 2022 (green), 2023 (pink), 2024 (olive), and 2025 (white). (Chart: SONAR)
Weak import volume in the fourth quarter could contribute to inhibiting a full volume recovery this fall, which would show up in SONAR as less pronounced volume and tender rejection peaks in the fourth quarter than are typical seasonally.
Maritime bookings of containerized US imports taken at the point of origin for 2023, 2024, and 2025 in pink, green, and white, respectively. (Chart: SONAR)
Bookings of maritime containers for US import are down 15% year over year, which includes little to no pickup in demand ahead of China’s Golden Week, a major holiday that takes place the first week of August. That percent change in bookings is roughly in line with the expectations from major ports and retail industry associations, which expect imports to be down about 10%+/- year over year in the fourth quarter. Unprecedented trade uncertainty continues with the potential for higher tariffs on China in November if the current reprieve on the highest tariffs expires, and also with the potential for lower tariffs if a trade deal is struck between the Trump Administration and Beijing. While maritime’s impact on the domestic freight markets could be muted because elevated upstream inventory levels have created pent-up demand to move already-imported goods downstream, recent tender data from Ontario is exceptionally weak and near its 52-week low, suggesting that it is not happening in large numbers currently.
Tender volume outbound from Ontario, California, the largest freight market among the SONAR segments and a major warehousing center, is shown for 2023, 2024, and 2025 in pink, green, and white, respectively. (Chart: SONAR)
Tender rejection rate oscillating between 5% and 6%
The national tender rejection rate for 2023, 2024, and 2025 is shown in pink, green, and white, respectively. (Chart: SONAR)
Tender rejection rates have been up and down in recent weeks, and the latest rate of 5.67% puts it near the midpoint of its recent range, excluding periods surrounding holidays. In contrast to tender volume, tender rejections have largely remained above year-ago levels for most of this year, although it is unclear if that will remain true in the fourth quarter against more difficult year-ago comparisons. In the past several months, tender rejection rates have become more sensitive to seasonal events, which temporarily remove capacity from the market. That suggests the freight market is getting closer to equilibrium despite very poor freight volume, which suggests that capacity continues to exit the market.
Contract rates remain muted as the fall bid season gets underway, and the most recent data points show average contract rates, excluding fuel surcharges, right on top of last year’s level at $2.31/mile. Of the truckload equipment sectors, dry van is under the most pressure, while the reefer and flatbed sectors have been more insulated from the weak freight market. Breaking the tender rejection rate down by equipment type, van, reefer, and flatbed rejection rates are 5.26%, 16.3% and 11.4%, respectively. Similarly, the average spot rate in the past week was $2.32/mile (NTI.USA), or $1.75/mile (NTIL.USA) after applying a method to adjust for the impact of fuel. Those measures are down $0.00-$0.02 per mile from the same measures at this time last year.
The average per-mile dry van contract rate for 2023, 2024, and 2025 is shown in pink, green, and white, respectively. (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.
