Volumes have dropped to near 2023 levels, while tender rejection rates remain fairly stable
This week’s FreightWaves Supply Chain Pricing Power Index: 35 (Shippers)
Last week’s FreightWaves Supply Chain Pricing Power Index: 40 (Shippers)
3-month FreightWaves Supply Chain Pricing Power Index Outlook: 40 (Shippers)
The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.
This week’s Pricing Power Index is based on the following indicators:
Tender volumes suffer one of largest declines in years
The freight market is now firmly suffering seasonal depression as tender volumes continue to show signs of weakness more than halfway through February. Seeing tender volumes fall in February isn’t a surprise, but the increasing weakness compared to last year is something to pay attention to, especially with manufacturing declining in January.
SONAR: Outbound Tender Volume Index — Seasonality View: 2025 (white) 2024 (green) and, 2023 (pink)
The Outbound Tender Volume Index (OTVI), a measure of national freight demand that tracks shippers’ requests for trucking capacity, continued to fall this week. Over the past week, the OTVI fell by 6.56% as the freight market continues to face fairly significant seasonal pressures. Compared with this time last year, tender volumes are down over 8%.
The decline in February isn’t out of the norm, but the rate of decline is concerning when compared to the previous two years. March is typically a month when activity starts to stabilize, and it will be even more important this year following the volume declines in the first half of February.
SONAR: Contract Load Accepted Volume — Seasonality View: 2025 (white), 2024 (green) and 2023 (pink)
Contract Load Accepted Volume (CLAV) is an index that measures accepted load volumes moving under contracted agreements. In short, it is similar to OTVI but without the rejected tenders. Looking at accepted tender volumes, the decline was comparable to the decline in OTVI, falling by 6.38% over the past week and down 9.72% y/y, though the y/y number is skewed lower due to higher rejection rates.
January’s retail spending report was a disappointing one. Total retail sales missed expectations, falling by 0.9% m/m in January while analysts were expecting sales to decline by just 0.2%. Total retail sales were still 4.2% higher than they were during the same period last year, which is a positive sign as spending is outpacing the rate of inflation. Excluding auto and gasoline sales, retail sales fell by 0.5% m/m but were still 3.9% higher y/y.
SONAR: Outbound Tender Volume Index — Weekly Change
A sluggish start to February from a volume perspective was felt across the vast majority of the country the past week. Of the 135 markets tracked within SONAR, 36 reported higher volumes over the past week, down from 48 last week.
The largest freight markets in the country all saw tender volumes decline over the past week, with the Ontario, California, market experiencing the largest decline of the bunch. Tender volumes in Ontario fell by 10.87% w/w, one of the largest declines outside of a major holiday week in quite some time.
In the Midwest market of Joliet, Illinois, the decline in tender volumes was far less severe – only 0.41% over the past week. That is impressive given overall volumes were down over 6% nationally.
Most of the markets where tender volumes increased over the past week were the smaller freight markets, though the Savannah, Georgia, market did see an uptick in tender volumes to the tune of 3.98%.
SONAR: Van Outbound Tender Volume Index (white, right axis) and Reefer Outbound Tender Volume Index (green, left axis)
By mode: The dry van market has been the underperformer for much of the past six months, and this week is no different. The Van Outbound Tender Volume Index fell by 6.61% over the past week. Compared to this time last year, dry van tender volumes are down 10.43%, a slightly larger decline than reefer volumes.
The reefer market, after experiencing strong growth to close out 2024 and begin 2025, has succumbed to market pressures. The Reefer Outbound Tender Volume Index fell by 6.28% over the past week and is 10.24% lower y/y. With produce season lurking around the corner in just a couple of months, it will be interesting to see if there is a recovery in reefer volumes.
Tender rejection rates fairly stable given market conditions
Tender rejection rates have been fairly resilient, holding in the 5%-6% range during February, which is a positive sign for a market that is reeling from seasonal pressures. The higher rejection rates compared to this time last year show that the market is primed for disruption if there is to be a demand-side catalyst, as capacity has clearly exited the market and will likely continue to do so.
SONAR: Outbound Tender Reject Index — Seasonality View: 2025 (white), 2024 (green) and 2023 (pink)
Over the past week, the Outbound Tender Reject Index (OTRI) dropped by 18 basis points to 5.63%, a sign that the capacity side of the market is actually fairly stable, especially compared to the demand side, which experienced a sizable drop. The OTRI is still 91 bps higher than it was this time last year, which is what is to be expected as capacity has been bleeding out of the market for the better part of two years.
SONAR: Outbound Tender Reject Index – Weekly Change
The map above shows the Outbound Tender Reject Index — Weekly Change for the 135 markets across the country. Markets shaded in blue are those where tender rejection rates have increased over the past week, whereas those in red and white have seen rejection rates decline. The bolder the color, the more significant the change.
Of the 135 markets, 58 reported higher rejection rates over the past week, up from the 21 that saw tender rejection rates rise in last week’s report.
Most of the increases in rejection rates stem from smaller freight markets, but instead of being isolated to markets in the Northeast and Midwest, the mid-Atlantic joined the party this week. The largest increases in rejection rates over the past week were in North Platte, Nebraska, where tender rejection rates increased by 867 bps, and the West Virginia markets of Huntington and Charleston, where they increased 788 and 430 bps, respectively.
Tender rejection rates were slightly lower in the two largest markets in the country – Ontario and Atlanta, where they fell by 73 bps and 19 bps, respectively.
SONAR: Van Outbound Tender Reject Index (white), Reefer Outbound Tender Reject Index (orange) and Flatbed Outbound Tender Reject Index (green)
By mode: Dry van tender rejection rates were fairly stable compared to the other two equipment types this week, though dry van is still the loosest of the three by far. The Van Outbound Tender Reject Index fell by just 9 basis points over the past week to 5.18%. Van rejection rates are 53 bps higher than they were this time last year.
While reefer tender volumes continue to trend lower rapidly, reefer tender rejection rates are following suit. The Reefer Outbound Tender Reject Index fell by 116 bps over the past week to 12.45%, which is still the highest of the three equipment types. Reefer rejection rates are still 564 bps higher than they were this time last year, highlighting that the reefer capacity situation has largely corrected itself.
Flatbed tender rejection rates dropped over the past week, but the flatbed market is the smallest of the three equipment types and thus tends to be the most volatile on a week-to-week basis. The Flatbed Outbound Tender Reject Index fell by 90 bps w/w to 10.56%, though it is just 2 bps lower y/y.
Significant rate declines in major freight lanes
With demand falling and the capacity side of the market fairly stable, everything points to spot rates declining. That is exactly what is happening. For carriers operating in the spot market, the positive sign is that spot rates haven’t tested the lows set in the middle of 2024.
SONAR: SONAR National Truckload Index (white, right axis) and Initially Reported Van Contract Rate (green, left axis)
The National Truckload Index (NTI) – which includes fuel surcharges and various accessorials – fell by 9 cents per mile over the past week to $2.28. Compared to this time last year, the NTI is unchanged as the market continues to combat declining volume levels. The linehaul variant of the NTI (NTIL) – which excludes fuel surcharges and other accessorials – was slightly smaller than the NTI’s decline, falling by 8 cents per mile to $1.72. The NTIL is still 7 cents per mile higher than it was this time last year, continuing to highlight the deflationary impacts fuel prices have had on all-in spot rates.
Initially reported dry van contract rates, which exclude fuel, fell slightly over the past week – down 4 cents per mile to $2.34, right in the range where contract rates have been for much of the past year. At the moment, the initially reported dry van contract rate is 6 cents per mile, or 2.6%, higher than it was the same time last year.
SONAR: Spot (linehaul) to contract rate spread
The chart above, showing the spread between the NTIL and dry van contract rates, is trending back to pre-pandemic levels. Over the past week, the spread was unchanged at minus 54 cents. The spread is actually 5 cents per mile wider than it was this time last year, though the overarching trend is for continued narrowing.
The SONAR Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas is dropping rapidly as market conditions in Los Angeles become more challenging. Over the past week, the spot rate from Los Angeles to Dallas fell by 18 cents per mile and is now significantly lower than the contract rate along this lane.
From Chicago to Atlanta, spot rate volatility has been the theme of 2025 so far, and this week is no different as spot rates have dropped significantly. Over the past week, the TRAC spot rate from Chicago to Atlanta fell by 32 cents per mile to $2.49, now well below contract rates on this lane.
