Tender Rejections at 13.5%: Is Freight Bottoming?

Tender rejection rates at 13.5% may indicate that the freight market has reached a temporary bottom before Labor Day, according to Zach Strickland's latest SONAR update. The halt in the downward trend is likely due to shippers shifting freight to intermodal transportation, which is being treated as a slower but deliberate option during periods of low urgency. While intermodal shifts have not had a significant impact in recent days, they suggest that available capacity has tightened enough to stabilize rejection activity.

In the coming weeks, rejection rates are expected to rise into Labor Day, likely continuing the supply-led cycle where accepted volumes have declined over the past five years while rejection rates have increased. This cycle is driven by capacity contraction rather than a surge in demand, as evidenced by carrier earnings reports from last year. Refrigerated spot rates are rising across much of the country outside the southern region, while dry van and flatbed rates are falling, albeit quickly.

Dry van and flatbed lane maps reveal a mixed picture, with pockets of rate increases tied to pre-Labor Day demand amid the overall downward trend. The market is currently tight by historical standards at 13.5% rejections, still well above the equilibrium point of approximately 7%. A meaningful end to this cycle will likely unfold slowly unless demand drops sharply, with the equilibrium target of 7% rejections unlikely to be reached this year.