As Thanksgiving approaches, freight volumes are rebounding after a slow start to November. This recovery brings optimism to the freight market, offering a potential boost through the holiday season.
Freight Volumes Rebound Ahead of Thanksgiving
After a mid-November dip, likely influenced by Veterans Day, the Outbound Tender Volume Index (OTVI) has surged by 2.56% week-over-week (w/w). This growth erases last week’s decline and positions OTVI 11% higher year-over-year (y/y). Short-haul shipments have been a significant contributor, with local hauls under 100 miles increasing by 5.97% w/w and shipments between 100–250 miles rising by 8.06%.
Contracted freight has also shown improvement. The Contract Load Accepted Volume (CLAV) index rose 2.31% w/w, reflecting higher rejection rates that push more freight into the spot market.
Major Retail Trends: Walmart Outshines Target
The retail sector has shown mixed signals heading into the holidays. Walmart reported a robust 5.3% y/y increase in comparable sales, while Target lagged with just a 0.3% rise, citing reduced discretionary spending. These trends suggest consumers are prioritizing value-focused retailers, aligning with the economic climate.
Regional and Modal Highlights
- Freight Market Variability: Among the 135 freight markets tracked, 66 showed volume growth this week, compared to 55 last week. Markets in Florida, including Miami and Lakeland, experienced significant increases of 29.53% and 14.97% w/w, respectively.
- Van and Reefer Segments: Dry van volumes increased slightly by 0.75% w/w but remain up 8.52% y/y due to easier holiday comparisons. Reefer volumes saw a minor decline of 1% w/w but are nearly 10% higher y/y, reflecting holiday-driven demand.
Rejection Rates and Spot Market Activity
Tender rejection rates are on the rise, climbing to 6.11%, which is 215 basis points (bps) higher than last year. Although still below pre-pandemic levels, rejection rates are showing seasonal strength, particularly in markets like Salt Lake City, which saw a 428-bps increase this week.
This uptick in rejections is bolstering spot market rates. The National Truckload Index (NTI) rose by 2 cents per mile to $2.37, while the linehaul variant (NTIL) increased to $1.82, marking a 22-cent improvement y/y. Declining diesel prices, down 16.8% y/y, have also supported spot rate stability.
Key Lanes Show Mixed Performance
Spot rates along high-traffic lanes reflect the current market dynamics:
- Los Angeles to Dallas: Rates climbed by 6 cents per mile to $2.68, surpassing contract rates by 18 cents.
- Atlanta to Chicago: Rates dipped by 2 cents per mile to $2.68, narrowing the spread with contract rates to one of the smallest gaps this year.
Outlook for the Holiday Season
With tender rejection rates trending upward and spot rates holding steady, the freight market is positioned for a strong finish to 2024. However, the reefer market and flatbed sector face unique challenges. Reefer rejection rates remain elevated, signaling robust demand, while flatbed rates have rebounded but may see limited upside due to delayed economic impacts from lower interest rates.
As Thanksgiving disrupts traditional freight patterns, the market appears poised for a temporary boost. Seasonal demand, combined with tightening capacity, could create a higher rate baseline heading into the year’s final weeks. Freight carriers and shippers should prepare for continued volatility as the holiday season unfolds.
