Market stable to close January; tariffs signal wild ride for February
Tony Mulvey
9 min read
(Photo: Jim Allen/FreightWaves)
This week’s FreightWaves Supply Chain Pricing Power Index: 40 (Shippers)
Last week’s FreightWaves Supply Chain Pricing Power Index: 40 (Shippers)
Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 40 (Shippers)
The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWavesSONAR 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:
Volumes rebound from holiday, still down year over year
The freight market has recovered from a volume dip associated with the Martin Luther King Jr. holiday. It took until the end of January to experience the first week without any disruption, whether winter weather or holidays. Tariff risks are firmly in the spotlight and will likely bring some level of volatility throughout the year.
SONAR: Outbound Tender Volume Index — Seasonality View: 2025 (white) 2024 (green) and, 2023 (pink) To learn more about SONAR, click here.
The Outbound Tender Volume Index (OTVI), a measure of national freight demand that tracks shippers’ requests for trucking capacity, erased the drop associated with the MLK holiday, rising 8.25% week over week. Tender volumes are still down year over year, currently off 1%, but the comparisons are far more accurate than they had been throughout the first four weeks of the year given the winter weather disruptions.
If tender volumes follow the seasonal pattern, they will likely decline throughout February. The end of February and beginning of March will be the period to see if the demand side of the market is able to establish positive momentum. The other factor: What does produce season look like this year, and is it enough to boost the market?
SONAR: Contract Load Accepted Volume – Seasonality View: 2025 (white) 2024 (green) and, 2023 (pink) To learn more about SONAR, click here.
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 increase was comparable to the increase in OTVI as tender rejection rates were relatively stable the past week. Accepted volumes are down 3.1% year over year, due to the y/y increases in tender rejection rates.
Bank of America’s most recent card spending report showed that growth in spending is slowing. In the most recent week for which data is available, the week ending Jan. 25, total card spending was up 0.7% y/y, down from a 5.6% increase the week prior. Bank of America noted that the timing of the MLK holiday muted spending growth.
SONAR: Outbound Tender Volume Index – Weekly Change To learn more about SONAR, click here.
The recovery from the holiday, with national volumes jumping by high single digits, has caused the vast majority of freight markets to experience higher volumes w/w. Of the 135 markets tracked within SONAR, 104 reported higher volumes over the past week, up from 44 last week.
The largest increases stem from the markets in the Southeast that were impacted by winter weather. Tallahassee, Florida; Macon and Tifton, Georgia; and Charleston, South Carolina, had four of the five largest weekly increases in tender volumes. All of the markets are fairly small relative to markets like Atlanta, but it does show that not only the holiday but also winter weather impacted volumes last week.
The largest freight market in the country, Ontario, California, experienced a greater increase than the national level, a sign that the market is moving in a positive direction. Tender volumes in Ontario increased by 15.87% over the past week.
SONAR: Van Outbound Tender Volume Index (white, right axis) and Reefer Outbound Tender Volume Index (green, left axis) To learn more about SONAR, click here.
By mode: The dry van market rebounded in a big way, reaching the highest level of the year to date to close out January. The Van Outbound Tender Volume Index increased by 10.2% over the past week, though it is still down 2.5% compared to this time last year.
The reefer side of the market continues to see fairly strong demand-side indicators. The Reefer Outbound Tender Volume Index increased by 5.2% over the past week – not as pronounced as the dry van market but positive nonetheless. The outperformance really shines through when compared to last year as reefer tender volumes are currently up 6.83% y/y.
Tender rejection rates remain remarkably stable
While seasonal pressures appear in January and February as capacity returns to the road following the holidays, this year has been quite a different experience. Tender rejection rates have been remarkably stable throughout the year at elevated levels compared to last year, but disruptions have been lurking around every corner this year. The stickiness shows that the market is shifting back in carriers’ favor, but it’s a slower grind than past cycles that have been driven by demand-side catalysts.
SONAR: Outbound Tender Reject Index – Seasonality View: 2025 (white), 2024 (green) and 2023 (pink) To learn more about SONAR, click here.
Over the past week, the Outbound Tender Reject Index (OTRI) was remarkably stable, increasing by just 3 basis points to 7.12%. The stickiness is impressive during a period when seasonal pressures typically arise. The end of the month also tends to provide a boost to tender rejection rates, though those end-of-month impacts are often muted to nonexistent during January. Compared to this time last year, tender rejection rates are 184 basis points higher, showing that the market is in a more fragile state than last year, but routing guides aren’t under immense pressure – yet.
SONAR: Outbound Tender Reject Index – Weekly change To learn more about SONAR, click here.
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, 76 reported higher rejection rates over the past week, up from the 38 that saw tender rejection rates rise in last week’s report.
Most of the increases in tender rejections continue to stem from fairly small freight markets, but a positive sign was the increases in rejection rates in the major Midwest freight hub: Chicago. Tender rejection rates in Chicago increased by 120 bps over the past week to 8.33%, the highest nonholiday level since May 2022.
SONAR: Van Outbound Tender Reject Index (white), Reefer Outbound Tender Reject Index (green) and Flatbed Outbound Tender Reject Index (orange) To learn more about SONAR, click here.
By mode: The dry van market continues to see tender rejection rates retreat from the holiday highs, but the rate of decline is starting to slow. Over the past week, the Van Outbound Tender Reject Index fell by just 9 basis points to 6.46%. Van tender rejection rates are still 141 bps higher than they were this time last year.
The reefer market continues to be the tightest of the three equipment types and has carried positive momentum into 2025. The reefer market does benefit from extremely low temperatures that necessitate protect-from-freeze measures, but the increased rejection rates continuing through January are a positive overall. Over the past week, the Reefer Outbound Tender Reject Index increased by 129 basis points to 16.57%. Reefer tender rejection rates are 722 bps higher than they were this time last year.
The flatbed market saw a slight increase in rejection rates over the past week, but it is a slower period of the year for flatbed projects that gain momentum as temperatures rise across the country. The Flatbed Outbound Tender Reject Index increased by 22 bps over the past week to 11.22%. Flatbed tender rejection rates are down 86 bps y/y, but expect volatility to ramp up in the coming months.
Spot and contract rates slide, still elevated compared to much of 2024
Even though tender rejection rates are proving to be sticky around the 7% level, spot rates are suffering a seasonal decline after the impacts of winter weather in the Southeast and Midwest are erased. The year-over-year comps this week are a challenge as winter weather impacted the South this time last year. Contract rates are starting the year fairly stable.
SONAR: SONAR National Truckload Index (white, right axis) and Initially Reported Van Contract Rate (green, left axis) To learn more about SONAR, click here.
The National Truckload Index (NTI) – which includes fuel surcharges and various accessorials – decreased by 4 cents per mile over the past week to $2.40. The NTI is 1 cent per mile lower than it was this time last year, though the comps this week were around the same time severe winter weather impacted much of the country last year. The linehaul variant of the NTI (NTIL) – which excludes fuel surcharges and other accessorials – fell by 5 cents per mile over the past week to $1.83. The NTIL is also 1 cent per mile lower than it was this time last year, the first time it has been lower y/y since April 2024.
Initially reported dry van contract rates, which exclude fuel, were stable over the past week, remaining at $2.37 per mile, near the midpoint of the 52-week range. Compared to this time last year, the van contract rate is up 4 cents per mile, or 1.7%, which is roughly what is to be expected, especially as publicly traded carriers are starting to be more optimistic about a cycle turn.
SONAR: RATES.USA To learn more about SONAR, click here.
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 widened by 2 cents to minus 43 cents, in line with the 2019 average. Compared to this time last year, the spread is 19 cents per mile narrower than it was, another sign that the market is moving to a more carrier-friendly environment.
SONAR: SONAR TRAC rate from Los Angeles to Dallas. To learn more about SONAR, click here.
The SONAR Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas rebounded in a significant way over the past week, now aligning with contract rates. The current spot rate along this lane jumped 21 cents per mile to $2.51, erasing all of last week’s decline. The spot rate is just 6 cents per mile below the contract rate.
SONAR: SONAR TRAC rate from Atlanta to Chicago. To learn more about SONAR, click here.
From Chicago to Atlanta, spot rates have been volatile since the beginning of the year. This week was no different. The spot rate along this lane dropped by 39 cents per mile over the past week to $2.92 per mile. The spot rate remains above the contract rate, though now it is just 11 cents per mile higher. The longer spot rates remain above contract rates, the more upward pressure there will be on contract rates.
