Business & Investment

Demand for refrigerated trucks remains hot in early winter

This Week’s Chart: Reefer Outbound Bid Volume Index, Reefer Outbound Bid Rejection Index – US Sonar: ROTVI.USA, ROTRI.USA

According to the Reefer Outbound Tender Volume Index (ROTVI), demand for refrigerated or refrigerated truck loading capacity is likely to continue and traditionally tend to increase towards later periods for the sector. ROTVI is a measure of refrigerated truck load demand that counts and indexes the total number of electronic requests sent by shippers to carriers. The percentage of these requests rejected is expressed in the Reefer Outbound Tender Reject Index (ROTRI). Again, it shows signs of an upward trend in January this year, after surpassing 40% for the first time since May.

Looking at the charts, this is unprecedented in either index, as the rejection rate and bid volume were much higher in early 2021 after the Deep Freeze event in Texas drove shippers into order frenzy. There is none. Since then, ROTVI has been on a roller coaster, dropping to its lowest point of the year in July and peaking in the fourth quarter in November.

Bid volumes fell again in December, but capacity became tighter and rejection rates increased. A similar pattern existed at the end of 2020 from November to the beginning of January 2021, but it is a deviation from the pre-pandemic seasonality. If we have learned anything in the last year, the fact is that the pre-pandemic pattern cannot yet be applied to the current cargo environment.

The big difference from last year is the upward trend in the bid refusal rate from December. ROTRI peaked after the New Year and has been much slower than any other holiday season since the start of the 2018 index. ROTRI continues to resist returning to pre-Christmas levels. 2021.

It is important to note that the rejection rate is much higher than at this point last year. ROTRI rose at a rate of about 41% on January 14, 2021, but has seen a significant increase over the past year, with spot rates up 28% compared to the same period last year.

The current value is about 38%, and these increases in rates have not significantly impacted carrier compliance. We have similar experience in the much denser dry van sector, but at a much lower level.

Van and reefer modes are essentially connected so that the reefer carrier can carry dry van cargo, so typical capacity fluctuations are represented in both modes. In the United States, frigerated container cargo tends to be inconsistent and seasonal, with a much smaller population of equipment. This makes the spot rate much more volatile and highly localized.

Looking at the Freight Waves SONAR Market Dashboard TRAC Spot Rate for rates from Northern California to Chicago, you can see that the rates for the first two weeks of the year are sticky. This is traditionally a late period in this lane and is famous for the movement of produce during the spring harvest. Currently, we see spot rates well above the peak values ​​of the spring before 2021.

The big point from now on is Last week’s chartMeans that seasonality is effectively broken, even in sectors driven by seasonal movements.

About this week’s chart

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Demand for refrigerated trucks remains hot in early winter Demand for refrigerated trucks remains hot in early winter

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