Carriers regain ground in seasonal freight negotiations

The latest FreightWaves Supply Chain Pricing Power Index shows that shippers’ pricing power rose to 40 this week from 35 the previous week, indicating a shift in negotiating power back to carriers.

Also Read: Challenges Facing Low-Cost Carriers (LCCs)

Seasonal declines in freight volumes are typical for this time of year, primarily due to mid-week declines over Christmas and New Year, causing volumes to slow earlier than usual. Analysis by FreightWaves using its SONAR platform showed that the Outbound Tender Volume Index (OTVI), which tracks national freight demand, fell 5.4% month-on-month and 2.43% year-on-year.

Despite the broader decline, some of the largest U.S. markets, such as Southern California and Dallas, saw slight increases in tender volumes. In contrast, markets such as Atlanta and Chicago fared poorly, with weekly volumes down 2.34% and 6.3% respectively.

On the capacity side, the market is experiencing an increase in bid rejection rates – reflecting tighter conditions. The Outbound Tender Rejection Index (OTRI) surged 286 basis points to 9.34%, with major gains in major markets such as Chicago, Los Angeles and Dallas. The increase in rejections is the first sustained holiday-related reaction in two years and suggests a more tense environment is coming as we head into early 2025.

Spot rates also experienced volatility, with the National Truckload Index (NTI) falling 9 cents to $2.43 per mile. However, the figure is still 18 cents above last year’s levels, possibly indicating further upward pressure as scrap rates adjust.

Data from IndexBox shows that despite the approaching Thanksgiving holiday, retail sales remained strong in November, with an expected month-on-month increase of 0.5%. As the market adjusts to these seasonal impacts, all eyes are on a potential post-holiday volume rebound and freight rate trends, with indicators suggesting that freight market conditions may become even tighter as 2025 approaches.

Source: IndexBox Market Intelligence Platform