Tender rejection rates have surged to 8.36%, marking the highest point since June 2022 and a massive one-week surge of 190 basis points. This is the sharpest increase in a single week since 2021, according to SONAR’s Outbound Tender Reject Index (OTRI.USA).
Santa is bringing presents this year
The current uptick in tender rejections stands in stark contrast to the muted holiday seasons of the past two years. While a seasonal increase is typically expected as we approach the Christmas holiday, this year’s surge is unprecedented in recent memory.
In 2022, rejection rates saw a 34-basis-point drop from Nov. 1 to Dec. 18 (4.45% to 4.11%).
2023 experienced a modest 65-basis-point increase during the same period (3.5% to 4.15%).
This year, we’ve witnessed a staggering 314-basis-point jump from 5.22% on Nov. 1 to 8.36% on Dec. 18.
Tender rejections are also up 425 basis points year over year. It’s a huge Santa rally!
To learn more about SONAR, click here.
The Santa rally is market-wide
Best news of all: All the major freight markets are participating in the rally.
Rejection rates in Los Angeles, Dallas, Atlanta, Chicago and Harrisburg, Pennsylvania, are all joining in the fun, indicating this is a market-wide event and not a single market blip.
To learn more about SONAR, click here.
Historical context
To put this in perspective, this is the highest level of market-wide tender rejections since June 2022, a time when many were still in denial about the impending freight recession, now known as the Great Freight Recession. The current “tender rejection short squeeze” has rapidly pushed rates through the 7% mark and into the mid-8% range.
Implications for the industry
This sharp movement in tender rejections, aligning closely with calendar events, reinforces the view that the Great Freight Recession is decisively coming to an end. For logistics professionals and supply chain managers, this trend suggests a need to reassess strategies and prepare for a potentially tightening capacity market.
Looking ahead
We anticipate that tender rejection rates will continue to climb throughout the holidays. With the market clearing 8%, carriers now have pricing power, at least for the time being.
If tender rejections maintain their upward momentum as we head into the first quarter, shippers who haven’t been planning contingencies will certainly regret it.
As the freight market rebounds, industry stakeholders should closely monitor these developments and adjust their operations accordingly.
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