As we approach the final weeks of 2024, the trucking industry is experiencing a noteworthy shift in market dynamics, with carriers regaining some pricing power ahead of the holiday season. Tender rejection rates have reached their highest levels in over two years, signaling a significant change in the market landscape.
The timing of Christmas and New Year’s falling on Wednesdays this year has triggered an earlier-than-usual slowdown in freight volumes. While this seasonal dip is expected, the industry’s attention is focused on two critical questions: the strength of the recovery in early 2025 and the impact of first-quarter seasonal pressures on volume levels.
Current data shows national freight demand experiencing a notable decline, with tender volumes down 5.4% week over week and 2.43% compared to the same period last year. The impact varies across different distance categories, with local deliveries (under 100 miles) seeing the steepest decline at 11.1%, while long-haul routes (over 800 miles) showed more resilience with only a 2.1% decrease.
Despite the overall volume decline, there are bright spots in major markets. Ontario, California, and Dallas have shown positive momentum with volume increases of 4.17% and 3.56% respectively. However, other key markets like Atlanta and Chicago have experienced declines.
The reefer sector has demonstrated particular strength, with volumes running 13% higher than last year, despite a slight weekly decline of 0.7%. In contrast, the dry van sector has seen more significant pressure, with volumes dropping 5.8% to yearly lows (excluding holidays).
Perhaps the most striking development is the surge in tender rejection rates, which have risen by 286 basis points to 9.34% – the highest level in more than two years. This increase is particularly significant as it’s widespread across markets, with 121 out of 135 markets reporting higher rejection rates. Major hubs like Chicago have seen rejection rates exceed 10%, with substantial increases also observed in Los Angeles, Dallas, Atlanta, and Harrisburg.
The reefer segment has shown exceptional tightness, with rejection rates soaring above 20% – more than double the rate from last year. The flatbed sector has also shown signs of life, though future projections for 2025 remain cautious following the Federal Reserve’s latest interest rate forecasts.
Looking at pricing, while spot rates have retreated slightly from recent peaks, they remain elevated compared to last year. The National Truckload Index currently stands at $2.43 per mile, marking an 18-cent increase year-over-year. This pricing strength, combined with rising rejection rates, suggests carriers may maintain their pricing advantage as we move into 2025.
As we look ahead to 2025, these market indicators suggest we’re entering a period of tighter capacity and potentially stronger pricing power for carriers, particularly after the typical seasonal weakness in the first couple of months of the year subsides.
The market’s behavior, especially the synchronized increase in rejection rates across major markets, indicates a significant shift from the patterns seen in recent years. This could set the stage for a more balanced market dynamic in 2025, with carriers potentially regaining some of the pricing power they’ve lacked in recent quarters.
