Panic buying is causing an unprecedented surge in domestic freight volumes. The outbound tender volume index is now at 11,314.12, which is the highest point in its three-year history. After surging 6% last week, OTVI is up another 7% since then. Two weeks ago, we predicted a jump in volumes from a typical “March bump,” but we did not properly forecast this type of rise. This surge is not typical, nor will it last. But for now, carriers are in a position to reject contract loads to test the spot rate because shippers are reeling to restock goods as fast as possible.
Reefer volumes have ticked up over the past week, but the majority of this upswing is from increasing dry van volumes. It is dry van volumes that are driving the index higher – VOTVI is at its highest point ever. We do not think this volume surge can or will last, but for now shippers are at the hands of carriers to meet this spike in demand.
Twelve of the 15 markets FreightWaves tracks were positive on a week-over-week basis. Markets with the largest gains in OTVI.USA were Miami (26.2%), Seattle (23.2%) and Fresno, California (8.4%). On the downside, this week saw a decline in Savannah, Georgia (-5.6%), Laredo, Texas (-2.4%) and Houston (-0.3%).
Tender rejections rise this week
Outbound tender rejections have climbed to over 8% this week. Fears of the coronavirus has some concerned drivers staying off the road. This is not the only factor forcing OTRI to the upside. OTRI is an index of rejected contract loads, and carriers are rejecting contracted rates in favor of spot market loads. Currently, spot market rates are higher than contracted rates in a majority of markets across the country.
Time will tell whether the coronavirus impacts capacity disproportionately. Poor health, diet and lifestyles of drivers are well-known in the U.S. It is possible that drivers will be disproportionately affected by the virus. COVID-19 has the potential to wipe out a sizable portion of trucking capacity in the coming weeks.
For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at khill@freightwaves.com, Seth Holm at sholm@freightwaves.com or Andrew Cox at acox@freightwaves.com.
Check out the newest episode of the Freight Intel Group’s podcast here.