National outbound tender volumes continued to climb this week by 5% week-over-week and 7% year-over-year. Overall volumes are surging even as import volumes are plummeting. There is typically a week lag before imports get tendered and included in our OTVI. The surge in imports at the end of April is playing a part in the volume surge. California is home to two of the largest ports in the country but is also the largest agricultural-producing state.
Both total volumes and reefer volumes out of California have surged over 30% in the past month. OTVI.CA is now at precrisis surge levels, which is remarkable. However, the volume surge that has occurred on a national level is too significant to have come from just one market and upward momentum is broad.
A few weeks back, the automotive industry seemed to represent a promising source of pent-up volumes once its factories came back online. The Michigan (OTVI.MI) and Ohio (OTVI.OH) outbound tender volumes have not risen as rapidly as the national average. However, inbound volumes to both Ohio and Michigan have been rising rapidly. This may translate into much-needed outbound volumes from the two states.
This time of the year, we should expect to see a produce bump, but total volumes are rising faster than reefer is currently. That said, traditional produce markets in the Southwest have exhibited the largest monthly changes in volumes (Tucson, Phoenix). The rapidly improving consumer spending data is also playing a role in this surge. The reopening of most states is unleashing the pent-up demand from Americans who have grown tired of being on house arrest. How long the surge can last remains to be seen.
On the positive side, 13 of the 15 major freight markets FreightWaves tracks were positive on a week-over-week basis. This ratio continues to be very strong in recent weeks. The markets with the largest gains in OTVI.USA were Los Angeles (17.10%), Atlanta (14.76%) and Savannah, Georgia (8.96%). The markets with declines were Seattle (-7.77%) and Laredo, Texas (-7.42%).
Tender rejections continue to improve with volumes
Outbound tender rejections have increased week-over-week for the third week in a row after tumbling for the six weeks since the OTRI peak of 19.25% on March 28. It seems the trough is now behind us, but at 4.02%, OTRI is still in a historically low range.
Rejection rates vary by trailer type. Currently, reefer rejections are more than double van and four times higher than flatbed. However, reefer rejections have flatlined this week. Van rejections are the primary source pushing OTRI.USA higher this week.
There are pockets of tightening capacity, mostly on the West Coast and in New England. Now that volumes have begun to return, OTRI is likely to rise modestly in the coming weeks as carriers regain confidence that they may have options besides their contracted freight. However, as of now, carriers are still accepting nearly every contracted load they can get their hands on to keep utilization high and keep trucks rolling. Capacity will not tighten significantly until freight volumes are restored in most markets around the country and that has not happened yet.
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