FREIGHTWAVES’ SONAR CHART OF THE WEEK (JULY 29- Aug. 05, 2018)
Chart of the Week: Outbound Tender Rejection Index USA: OTRI.USA
SOURCE: OTRI.USA. Outbound Tender Rejection Index shows % of loads that were accepted in the market vs. what was offered.SULTAN OF SONAR SAYS:
While we hate to use an identical index two weeks in a row, this week calls for it. Last week, we reported that the tender rejection index (OTRI.USA) had fallen to 20.64%. This week, the downward pressure continues meaning that freight demand and carrier optionality continues to drop. The index is currently at 19.30%, just .18% or 18 bps above the lowest point in 2018.
This critical technical point is of interest because if we fall below, it likely means that the summer slow-down will continue for a few more weeks and spot pricing will also fall. Based on the performance of the publically traded truckload stocks over the past two weeks, any sign of weakness will probably reinforce the view from Wall Street that the trucking market has peaked, whether merited or not.
Since OTRI is an index that tracks electronic tender rejections/acceptance, it is a relialble predictor of trucking spot-rates over the next few weeks. In light of this, we can forecast that spot-rate reports will continue to show weakness in the market.
Have we peaked? We believe that the white-hot spot market has probably peaked for now, but there is little reason for the asset-based carriers that operate on fixed contractual rates to panic. Volumes in the market are at the level they were in March of 2018, showing that the freight market has legs even in one of the slowest seasons of the freight cylce.
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About Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week the Sultan of SONAR will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
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