The latest snapshot of the trucking industry shows carriers are handling about the same volume of shipments as they did back in April 2023, during what’s considered a downturn for the freight sector. However, there’s a noticeable uptick in rejection rates, which indicates that more carriers are turning down freight they previously would have accepted. This pattern reveals that the market is shedding more capacity than before, and it’s a trend that’s gaining traction.
Let’s break it down a bit. The Contract Load Accepted Volume index, or CLAV, measures the loads that carriers agree to transport, differentiating from the Outbound Tender Volume Index (OTVI) by excluding rejected offers. When rejection rates climb, it suggests a struggle in securing truckload capacity. By comparing the Outbound Tender Reject Index (OTRI) with CLAV, we get a sense of how balanced the truckload supply and demand really are.
In May 2023, for example, the CLAV hit 13,951 while the OTRI was at a low 2.92%. Fast forward to last Thursday, and the CLAV had slightly dipped to 13,910 but the OTRI had more than doubled to 6.48%. Even though not every load is the same, the average hauling distances remained consistent during these times. There’s a seasonal aspect to all this, but the key insights lie in the trends over time.
From the start of September to November, we saw a gradual decrease in accepted load volumes before they leveled out, while rejection rates moved upward from 4.5% on Sept. 29 to 6.5% by Dec. 12. This rise can’t be chalked up to the usual holiday-driven reduction in capacity. Historically, only in 2019 did we experience a similar escalation at this time of year. Typically, outside of 2019 and now, rejection rates tend to flatline or dip as Thanksgiving approaches.
Historical data over the past seven years shows rejection rates typically trend downward, a reflection of reduced demand post-Labor Day. This year, however, the expected Thanksgiving spike isn’t on the cards. Instead, rejection rates continue their upward trajectory, and it doesn’t appear to be fueled by increased demand.
The growing gap between the OTVI (total shipment offers) and CLAV (accepted shipments) over the past year signals a contraction in trucking capacity. This gap, highlighted by the OTRI, reflects the reduction of capacity, a trend where typically one would expect accepted volumes to remain stable or climb slightly in response to total tender volume increases, as seen in 2020.
This rapid decline in capacity is striking, something not easily captured with traditional metrics. The Carrier Details provides refined data from the Federal Motor Carrier Safety Administration, offering insights into weekly net changes in operating authorities. This adds clarity but doesn’t fully account for the actual fleet sizes or operational removals. Despite these challenges, it remains a solid barometer for market health. Persistently negative data signifies tough times for carriers, and averaging over 350 net carrier exits a week in recent years is an unprecedented event.
The bottom line? The dwindling trucking capacity is evident in consistently higher rejection rates. While there’s some seasonal market pressure now that wasn’t there in May 2023, the cause is less about the time of year. Rejections and spot rates may dip post-holidays, but it’s unlikely to signal a quick recovery.
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For those interested in exploring SONAR further, there’s a demo request option available. The content on rising rejection rates amidst shrinking demand highlights the ongoing capacity crunch in the truckload market, underscoring significant industry shifts.
