Chart of the week: OReefer Outbound Tender Reject Index, Outbound Tender Reject Index – USA SONAR: ROTRI.USA, VOTRI.USA
National rejection rates for reefer tenders (ROTRI) have averaged above 14% since early October, compared to around 8% in the same period in 2023. This significant jump and continued trend indicate that the refrigerated truckload market is becoming a more challenging transportation process enters. procurement environment as we approach the ironically named ‘protect-from-freeze’ season.
The tender rejection rate measures the frequency with which carriers deny requests for cargo coverage from contracted customers due to capacity constraints. Higher rejection rates reflect a favorable environment for truck drivers, indicating that demand exceeds available supply, increasing the value of their services.
Although the refrigerated container and dry van truck markets are loosely linked, national dry van rejection rates (VOTRI) generally correlate with refrigerated truck rates, but at a lower level.
In 2019, ROTRI averaged over 15%, while VOTRI averaged just over 5%. During the pandemic peak in 2021, ROTRI rose to almost 40%, while VOTRI averaged 23%. Over the past two years, the difference between the two indices has been unusually small. In 2023, ROTRI averaged an all-time low of 5.3%, compared to 3.4% for VOTRI, reflecting the loose truckload market.
The difference in volume partly explains the difference between these indices. Dry van shipments account for roughly 60%-70% of the data, while refrigerated shipments account for only 10%-20%. This smaller sample size makes ROTRI inherently more volatile, highlighting the importance of its muted responsiveness in 2022-2023.
In 2023, the refrigerated container market initially appeared to tighten, driven by regional disruptions in the Northwest and Midwest.
The rejection rate in the Northwest approached 50% by the end of November, while the rejection rate for refrigerated containers in the Midwest, typically above 8% during the fall, around Christmas and during the Arctic cold snap in January, spiked to 13%.
The Northwest contributes only about 5% of refrigerated tenders, while the Midwest, which represents about 35%, has a greater impact on the national average. Consequently, changes in higher volume regions have a greater impact.
Rejection rates fell back to near record lows in the spring, as the market recovered from warmer weather in February and March.
This year, rejection rates in the Northwest (ROTRI.URNW) are less pronounced, but rejection rates in other US regions are higher and increasingly volatile. This indicates reduced overall capacity and a more uniform tightness in the market, which is less dependent on seasonal pressure.
