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Length of Haul Does Impact Acceptance Rate

If you’ve been following the overall U.S. volume and shipment rejection rates this year, aside from the typical blips seen around the holidays, these have been relatively stagnant. The overall rejection rate has hovered very near the three percent range.  

However, if you break that down by the length of haul, it’s clear that carriers clamor for those short-haul shipments, anything less than 250 miles, as this typically will allow the drivers to be home at night. On the other end of the spectrum, those mid-range shipments (250-450 miles) are seeing the highest rejection rate, just below four percent as seen in Figure 1.1.  

There could be several reasons for this. Most likely it’s the fact that a driver can make a trip of that length in one day, but it’s not a full day’s worth of driving. So, if the driver is getting a per-mile rate and not driving for the full 11 hours that are eligible, this length of haul “loses” money when compared to longer shipments that allow the driver to hammer down for the full allotment of driving hours.  

Now, I realize four versus two-point-five percent doesn’t seem like a big gap, but that is a 60 percent variance. If the freight volumes and capacity begin to balance, and rejection rates by length of haul follow the same trends, you could see mid-range rejection rates in the 15 percent range while shorter hauls only see rejection rates in the six percent range. Certainly that will have an influence on future rates.

SPOT AND CONTRACT GETTING CLOSER

As expected in Figure 1.2, the variance between contract and spot rates continues to shrink. Since the widest gap this year, when contract rates were about $0.78 per mile higher than spot rates, the gap has shrunk by almost 30 percent in a three-month period. 

For the most part, spot rates have found a floor, and if anything, have seen a modest uptick. Contract rates have seen frequent requests for re-pricing. Carriers continue to refine their contracted rates balanced with the expectation of almost 100 percent compliance with freight tenders and excellent service.  

In 2021 and 2022, shippers were open to expanding their carrier and broker pool as capacity constraints and increased volume necessitated more choices. Now that the balance has shifted, shippers are looking to right-size their partners, with a mix of compliance, price, and service steering their decision-making process.

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