Business & Investment

Carriers hesitate to return pricing power to shippers

This Week’s Freight Waves Price dominance index: 75 (carrier)

Last week Freight Waves Price dominance index: 75 (carrier)

Three months Freight Waves Price Dominance Index Outlook: 65 (Carrier)

The Freight Waves Pricing Index Use analysis and data Freight Waves Sonar Analyze the market and estimate the bargaining power of charges between the shipper and the carrier.

The price dominance index is based on the following indicators:

Bid volume returns a portion of last week’s profits

The bid volume was a bit breathtaking in the past week, mostly as the Martin Luther King Junior Day holiday started the week. Bid volumes around MLK Day drop slightly each year, but not as extreme as on other holidays.

Bid volume surges to levels a year ago
Sonar: OTVI.USA: 2021-22 (blue), 2020-21 (orange), 2019-20 (green)
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After a sharp rebound last week, the Outbound Bid Volume Index (OTVI) fell 2.58% last week. OTVI was actually better maintained in the week affected by MLK Day than in the previous two years, down 4.58% in 2021 and 3.68% in 2020. OTVI has exceeded the 2021 level and is now up nearly 5% year-on-year.

Warehouse space is virtually sold out, especially on the west coast. Prologis (NYSE: PLDEarlier this week, he reported full-year earnings and stated that the US occupancy was 98.2%. In Southern California, which is about 14% of the available square feet of Prologis, 99.4% of the available space is leased. Ultimately, the limited warehouse space in Southern California will be the driving force for cargo demand in the market as shippers need to move cargo to secondary and tertiary market warehouse spaces.

Bid volumes accepted in the past week have fallen below OTVI as the Outbound Bid Rejection Index (OTRI) has risen at the national level. The accepted volume decreases by 3.4% weekly (w / w) and decreases by 1.25% over the past month. However, the bid volume accepted continued to exceed the previous year’s level and is now about 5% higher than the 2021 level.

An increasing amount in the east coast port market.
SONAR: Outbound Bid Volume Index – Weekly Change (OTVIW).
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Bid volumes in most parts of the country have decreased by w / w as trading volumes have decreased as a result of MLK Day. Of the 135 markets, only 44 reported weekly increases. The country’s largest market in Ontario, California, reported a weekly decline as bids fell 1.04%, surpassing the overall index.

The East Coast market was more durable than the West Coast market. Savannah, Georgia, in particular, had a good week with bids up 11.23% w / w, the 11th largest increase in the country. Neighboring markets in Charleston, South Carolina and Jacksonville, Florida reported a modest increase in w / w, with sales volume increasing 0.26% and 0.62%, respectively.

By mode: The Reefer Outbound Tender Volume Index (ROTVI) has continued to rise over the past week, with an additional 2% w / w increase. The amount of refrigerated containers benefited from the winter weather that hits the upper Midwest and most of the East Coast, as shippers had to change modes to protect their goods from freezing. The amount of reefer is approaching the gap with the previous year’s level and is now just 0.6% below the 2021 level.

The Van Outbound Volume Index (VOTVI) fell slightly this week, down 3.17%. Considering that the overall index has fallen by more than 2.5% w / w, the amount of vans decreases by a larger percentage because the amount of vans accounts for more of the total amount than the amount of refrigerators. There is a possibility. The number of vans continued to exceed the previous year’s level, exceeding 3% year-on-year.

Compliance improved in 2022 due to higher contract rates

After a contract rate increase of more than 20% over the past year, the shipper may not have achieved the expected level of compliance. Carriers are still refusing to load one-fifth and are choosing to play in the spot market.

Rejection rates continue to narrow the gap with previous year levels
Sonar: OTRI.USA: 2021-22 (blue), 2020-21 (purple), 2019-20 (green)
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Last week, OTRI, which measures the relative capacity of the market, increased 68 basis points (bps) to 21.58%. OTRI is now just 35 bps below the previous year’s level, with the narrowest gap since mid-August.

The rise in bid rejection is not a seasonal pattern, but an indication of how vulnerable the current market capacity is. In 2021, a winter storm hindered market improvement, with rejection rates going from about 21% to about 27% in just one week. Rejection rates have returned to around 21% in the last nine months, but such another event could cause the rejection rates to skyrocket again, putting further pressure on rates that are already close to record highs.

Difficult capacity conditions continue to dominate the country:
Sonar: WRI (color)
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The map above shows the Outbound Bid Rejection Index — the Weighted Rejection Index (WRI), which is the product of weekly changes and outbound bid market share, as a way to prioritize changes in rejection rates. With production capacity tight nationwide, there are many notable markets, the blue market.

Of the 135 markets, 90 reported higher rejection rates in the past week as winter weather depleted capacity in the largest market in the northeast.

Harrisburg, PA is one of the largest markets in the country, with rejection rates increasing by 322 bps over the past week. In addition, Elizabeth, NJ, which houses New York / New York Harbor, has seen a dramatic increase in rejection rates over the past week, rising 318 bps w / w.

Cargo demand in the region is still so strong that capacity continues to flow into Southern California. As carriers returned to the West Coast, the rejection rate dropped by 174 bps w / w in Ontario.

Sonar: VOTRI.USA (blue); ROTRI.USA (orange); FOTRI.USA (green)
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By mode: Both refrigerated container and van capacity requirements have remained relatively unchanged over the past week. Both the Reefer Outbound Tender Reject Index (ROTRI) and the Van Outbound Tender Reject Index (VOTRI) remain rising, indicating that difficult capacity requirements continue to plague the market. Last week, VOTRI increased 66 bps to 20.7% and ROTRI remained flat at 38.75%.

The flatbed market has seen dramatic changes in capacity over the past week. The Flatbed Outbound Tender Reject Index (FOTRI) increased by 678 bps w / w to a rejection rate of 33.26%. The national flatbed rejection rate is only 200bps from the all-time high set just a month ago. The flatbed rejection rate is more than 2,100 bps higher than the previous year’s level.

Spot rates fall after capacity returns to road last week

Spot rate data available on SONAR from will be updated every Tuesday with the previous week’s data.

The spot rate drops slightly, but the contract rate remains the highest ever in the data series.:
Sonar: national spot rate (blue, right axis) and dry van contract rate (green, left axis).
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Based on the top 100 lanes of’s roadboard,’s national spot rate has declined somewhat as capacity has returned to the market. National spot rates have cooled to $ 3.79 per mile after reaching an all-time high of $ 3.83 last week. This includes fuel surcharges and other accessories. The decline in spot rates followed last week’s decline in rejection rates and remained around 21%.

Of the 102 lanes from the roadboard, 42 reported an increase in spot rates last week. Lane fares from the Mid-Atlantic, especially outbound Pennsylvania, rose in response to expected bad weather and increased cargo volumes.

Meanwhile, contract rates remained strong at $ 2.80 per mile last week, maintaining the highest level in the rate-tracked dataset since January 2017. Contract rates are reported with a delay of 2 weeks. Carriers are still refusing to load one-fifth, so carriers continue to drive higher contract rates until 2022.

The contract rate, which is the baseline hole rate excluding fuel surcharges and other accessories included in the spot rate, maintains the same gap as the spot rate, up 22% year-on-year.

Freight Waves’ Trusted Rate Assessment Consortium (TRAC) spot rates from Los Angeles to Dallas continue to decline, averaging $ 3.84 per mile. In the window between Christmas and New Year’s Day, the TRAC rate for this lane exceeded $ 4 per mile, but when capacity returned to Southern California, it stabilized around the current rate in just two weeks until 2022. ..

Sonar: Freight Waves TRAC rate from Los Angeles to Dallas.
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Freight Waves’ TRAC spot rate from Atlanta to Philadelphia has also returned to less than $ 4 at the current $ 3.94 per mile. Outbound rejection rates and bids to Pennsylvania surged last week, promising higher rates to attract carriers to the region. However, this lane goes through the route of the upcoming winter storm Jasper, so carriers need to assess whether their potential rewards outweigh the risks.

Sonar: Freight Waves TRAC rate from Atlanta to Philadelphia.
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The winter storm Jasper, which is expected to bring ice and snow to Texas and the southern Mid-Atlantic, may maintain holiday-level rates in the lanes of these regions. However, elsewhere, spot rates should decline as capacity continues to be added to the market in 2022. Despite this seasonal trend, consumer demand remains high and port congestion makes it difficult to expect an immediate return to pre-pandemic rates. Not cleared yet.

Contact Kevin Hill for more information on FreightWaves Freight Intel Group. Or Tony Mulvey at

Carriers hesitate to return pricing power to shippers Carriers hesitate to return pricing power to shippers

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