Both truckload tenders and tender rejections rose this week. If spot rates continue to exhibit their recent lagging relationship with tender rejections, spot rates could inflate over the next few weeks. Also, with Thanksgiving just a week away, drivers will be seeking freight that drives them toward home, which could push rejections and spot rates higher. 

The truckload market has been driven by the consumer in 2020. And while we still expect a strong holiday truckload and parcel market due to a resilient U.S. consumer, the latest retail spending data from the Commerce Department disappointed. Tuesday morning, the October retail sales number was published and showed an increase of .3% compared to economist expectations of .5% and a material decline from the 1.9% growth in September. 

In order to alter our thesis, though, economic data will need to deteriorate across multiple data sets and for longer than one month. And although retail sales did disappoint compared to expectations, they did expand. One potential risk to consumer spending is a failure to pass another round of fiscal stimulus. Another is the continued canary in the coal mine of brick-and -mortar spending in the top COVID hot spots (-7.8%) compared to the rest of the U.S. (-1%), according to Bank of America data this week. If the pandemic outbreak continues to accelerate and spreads to other pockets of consumer spending, the current momentum in the truckload market could be compromised.

Spot market volumes took a leg down this week, with more than two-thirds of the 100 lane pairings contracting. However, contract volumes moved in the opposite direction this week, up 2.16%. 

Peak retail season is underway, which means that overall truckload volumes are unlikely to fall off a cliff. The national trucking market will be supported by consumer holiday shopping even though some shippers — for instance those selling building materials — will enter a seasonally soft period. Additionally, there are more loaded ships (15) anchored off the West Coast awaiting port space now than at any time in the past five years, which will serve as pent-up demand for further intermodal and truckload volumes. 

Our thesis largely remains the same: relatively tight capacity, strong volumes and positive cyclicality. The low inventory-to-sales ratio, strong consumer sentiment and spending, lack of service-based spending options and acceleration of e-commerce growth all bolster our belief. The arrival of COVID-19 vaccines (which should shift the mix of consumer spending back in favor of services relative to goods) and surging new truck orders top the current list of concerns to monitor. 

On a positive note, 11 of the 15 major freight markets that we monitor as a broad, representative benchmark were positive on a week-over-week basis. This ratio restrengthened this week back to the stronger levels it has become accustomed to in recent months as the freight market rallies. The markets with the largest gains this week in OTVI.USA were Fresno, California (14.21%), Seattle (6.89%) and Indianapolis (6.88%). The markets with the largest declines this week in OTVI.USA were Miami (-6.92%), Atlanta (-2.46%) and Memphis, Tennessee (-1.13%).


Tender rejections remain elevated

Tender rejections rose this week to another all-time high at 27.84%. Any moves up or down from this level are marginal and do not materially affect capacity. Many industry observers contend that there is a natural ceiling for the Outbound Tender Reject Index (OTRI) and that the market is at or nearing that point. The rationale is that contract rates will be significantly upwardly negotiated as bid season approaches given the strength of the spot market.

Compared to previous years, rejection rates are exceptionally strong, more than 2,000 bps higher than 2019 levels and more than 1,200 bps higher than 2018 levels. Rejection rates slid in 2018 throughout October before grinding higher in November and December but ultimately exited the fourth quarter lower than they began the quarter. In 2019, rejection rates started climbing at a rapid rate starting Nov. 18, about 10 days before the Thanksgiving holiday, jumping ~300 bps in the last two weeks of the month. In 2020, rejection rates are likely to stay strong through the rest of the year in our view, though they likely will not climb at similar magnitudes to the previous two years due to the already extraordinarily high levels. 

The West Coast markets tightened this week, reversing the trend of slight softness the past couple of weeks. The Passport Research team noted a small, tentative and weak but possibly telling bullish signal in the Los Angeles and Dallas markets this week. 

Tender rejections in both LA and Dallas moved higher, together, over the past week. For much of the year, the markets traded capacity back and forth, with rejections rising in one market but falling in the other.  

Now there simply aren’t enough trucks in either market to move the available freight. If Los Angeles and Dallas consume an increasing share of spot trucking capacity relative to other major markets, nationwide spot rates could run up again. 


For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at, Seth Holm at or Andrew Cox at

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