![July 2024 Freight Market Update](https://sp-ao.shortpixel.ai/client/to_webp,q_glossy,ret_img/https://trinitylogistics.com/wp-content/uploads/2022/03/transport-fleet_08222022.jpg)
07/19/2024 by Greg Massey
July 2024 Freight Market Update
Stay up to date on the latest information on conditions impacting the freight market, curated by Trinity Logistics through our Freightwaves Sonar subscription.
UP AND TO THE RIGHT
For the past year, the general direction of the Outbound Tender Volume Index (OTVI) has been on an upward trajectory as seen in Figure 1.1.
![Figure 1.1 is a graph of the Outbound Tender Volume Index in the United States. From it, you can see that volume index is quickly increasing, showing somewhere close to 9,000 in August 2023 to currently around 12,000 in July 2024.](https://sp-ao.shortpixel.ai/client/to_webp,q_glossy,ret_img,w_1080,h_285/https://trinitylogistics.com/wp-content/uploads/2024/07/July-FMU-figure-1.1.png)
While it is not approaching the levels seen in 2021, the volume index is quickly approaching levels seen in 2022. This has buoyed optimism in the industry.
Another rise we’re keeping an eye on is the Outbound Tender Rejection Index, the rate at which carriers are saying “no” to freight where they have paper rates with a shipper. A six percent rejection rate may not sound important, but considering the rejection rate has stagnated in the three-to-four percent range for the past year plus, it’s another sign that the freight pendulum may be nearing more of a balanced market.
In 2021, rejection rates hovered in the 20-30 percent range. This was more a product of increased freight volumes and carriers realizing they could get higher rates in the spot market versus the contracted rates they had in place. The uptick in rejection now appears to be more of a limit of capacity in certain markets versus carriers hedging their bets on the open load board.
Drip, Drip, Drip
Speaking of that capacity, there is a reduction happening, albeit a slow drip. As shown in Figure 1.2, for the past year and a half, almost two years, the biggest reduction in capacity has been from the owner-operator segment. Most likely, the carriers in this group that have exited the market are those that rushed in when freight and rates were plentiful, and now are finding more normalized rates combined with high overhead to be unsustainable.
As shippers continue to look ahead, not having reliability among this segment of carriers could prove problematic as volumes escalate and more freight flows to the spot market, which is supported heavily by owner-operator drivers. This is a good reason for shippers to ensure they have a good mix of carrier and broker partners.
![Figure 1.2 is a graph showing the percent increase in number of tractors from November 2016 to March 2024. There are four lines, one dark blue representing carrier companies with one tractor, orange representing companies with two to 19 tractors, a gray line representing companies with over 19 tractors, and a light blue line that represents the total of all companies. In this graph you can see that all lines a very small percent, close to 0 percent, to slowly increasing over time until July 2020, where there is a large jump in the percent through November 2022, where it starts to drop and continues falling through the most recent date of March 2024.](https://sp-ao.shortpixel.ai/client/to_webp,q_glossy,ret_img,w_1024,h_365/https://trinitylogistics.com/wp-content/uploads/2024/07/july-fmu-figure-1.2-1024x365.png)
Baltimore Still Recovering
Finally, it has been just over three months since the bridge collapsed near Baltimore, MD. The waterways in the surrounding area appear to be returning to normal, and the need for traffic that populated the bridge to divert to alternate routes seems to be no worse for the wear on drivers.
Looking at volume in that market in Figure 1.3 since the end of March when the event occurred, after a slight dip when freight had to be re-routed, volumes as measured by the OTVI have increased just over 10 percent. Certainly, there is still work to be done, short- and long-term, but the Baltimore area appears to have powered through an unfortunate event.
![Figure 1.3 shows another graph of the Outbound Tender Volume Index but just for Baltimore, Maryland, from June 2023 to May 2024. In the second half of the graph, for all of 2024, you see the graph increasing until a big dip in April 2024, when the Francis Scott Key bridge collapse. Since then its it's been mostly making its way upward again, closer to normal.](https://sp-ao.shortpixel.ai/client/to_webp,q_glossy,ret_img,w_1024,h_211/https://trinitylogistics.com/wp-content/uploads/2024/07/july-fmu-figure-1.3-1024x211.png)
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