Despite trending lower, dry van tender rejection rates still indicate a tight market. Learn why capacity isn’t expanding, even as carriers face cost pressures outpacing revenue growth. We’ll dive into the latest SONAR data, including regional rate maps and intermodal volumes, to uncover the hidden signals in today’s fragile freight market.
Dry van tender rejection rates have drifted lower over the past few months but remain around 11%, a level that still signals a tight market, according to FreightWaves analyst Zach Strickland. Despite the slow softening, Strickland cautioned that the market has not meaningfully loosened — carriers and shippers alike should not expect relief soon, particularly with peak season approaching and capacity growth still lagging.
Spot rates, tracked by the National Truckload Index, have held firm after pulling back slightly from a July 4th peak. Strickland noted that input cost pressures — flagged explicitly in J.B. Hunt’s earnings and echoed across most major carriers — have outpaced revenue gains, reducing the financial incentive for new owner-operators to enter the market. “The costs have really outpaced the revenue growth gains,” he said. “Doesn’t mean they’re losing money necessarily, but that doesn’t mean that we have the ample amount of cash flowing into the space that we had during COVID or even the 2018 market.”
A four-day rate-direction map showed more lanes increasing than decreasing across most of the country, a signal Strickland described as evidence of continued fragility. Los Angeles stood out as the most pressured market, with 67% of rates moving higher, all on larger lanes, and spot rates running roughly 15% above contract rates. Strickland said the looming West Coast port strike added urgency to the situation given the region’s proximity to heavy retail-focused demand corridors in the Northeast, Chicago, Atlanta, and Dallas.
“Spot rates are really not ready to take on any more demand is the point of this map. The fact that we are in early November, we’re not seeing strong demand-side growth.”
On the other end of the spectrum, Savannah — the second-largest port complex on the Eastern Seaboard — showed notable loosening. Rejection rates there have fallen to nearly 6%, approaching the second-lowest reading of the year, and spot rates have dropped below contract rates, with roughly 7% of lanes declining significantly. Strickland called the divergence between Los Angeles strength and Savannah weakness “very strange this time of year,” attributing the imbalance to port activity concentration on the West Coast.
The refrigerated sector is under even more strain than dry van. Reefer rejection rates surpassed their Labor Day peak, eclipsing the prior July 4th summer high, and spot rates have held at elevated levels. Harvest activity in Idaho and Oregon continues to tighten the Pacific Northwest, while Twin Falls, Idaho registered the most significant rate increases in the reefer network. The Midwest, which Strickland said has arguably been the tightest refrigerated region all year, also showed no signs of meaningful recovery.
Intermodal volumes added another layer of complexity to the demand picture. Loaded domestic intermodal container volumes dipped in recent weeks after the country’s largest transcontinental volume lane was temporarily shut down. Strickland noted that a parallel dip on the international side suggests the pullback is a broad market demand event rather than a mode-specific anomaly, though he said he expects volumes to recover.
Dry van tender rejection rates sit near 11% — still a tight market — but capacity growth has not materialized despite more than 12 months of elevated rejection rates.Los Angeles spot rates are running 15% above contract rates with 67% of lanes increasing, while Savannah rejection rates have fallen to nearly 6% and spot rates sit below contract levels.The refrigerated market is tighter than dry van, with reefer rejection rates exceeding both the July 4th and Labor Day peaks, and the Pacific Northwest and Midwest showing the most acute capacity constraints.
This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.
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