Chart of the Week: Outbound Loaded Rail Container Volume, Outbound Tender Volume Index – USA SONAR: ORAILL.USA, OTVI.USA
Requests for truckload capacity (OTVI) have averaged nearly 9% lower year over year (y/y) since mid-February, while intermodal volumes (ORAILL) have remained relatively steady, growing at a 5% rate since the start of the year. This places total transportation demand in a state of decline, regardless of seasonal influences. Should this be considered a concerning signal from an economic perspective?
The short answer is yes, but it is not alarming. Headlines about tariffs and uncertainty surrounding trade policy have dominated business media since late February, prompting many executives and economists to consider the possibility of a recession.
Businesses need clarity on trade policy to make long-term decisions and investments. Uncertainty about the end goal of the tariff negotiation strategy makes it difficult for supply chain managers to determine what and where to source their raw materials and goods while keeping costs manageable.
This challenge is compounded as consumer confidence weakens due to concerns about inflation and a softening job market.
Businesses are caught in the middle, trying to manage upstream production and sourcing while predicting whether their customers will adjust their purchasing behavior in the coming year. The near-term result is stagnation.
Importers continue bringing goods into the U.S. to build inventories ahead of potential new tariffs. The Inbound Ocean TEUs Volume Index (IOTI), which measures container bookings based on departure dates from ports of lading worldwide, showed 2% annual growth as of Wednesday and has remained consistently higher than in 2024 throughout the past month.
Much of this freight is being pushed into increasingly crowded warehouses.
The Logistics Managers’ Index (LMI) inventory level component indicated strong growth in February, coming in at 64.8 – only slightly higher than the previous year’s 63.8. However, inventory levels in preceding months were significantly stronger, suggesting shippers have been building stock for months rather than reacting to a single seasonal event.
While this could be a bullish sign for the economy’s future, it does not necessarily hold in an environment of uncertainty.
At the end of the pandemic era, surface transportation demand collapsed as consumption waned. Import demand followed months later, leading to an inventory glut and a prolonged effort by companies to clear out warehouses.
Although a similar scenario is not as imminent as it may appear – especially with intermodal’s market share gains not reflected in the chart – a comparable mechanism is at play.