Freight Market Alert: Why October’s Tender Rejections Hit 14% Unexpectedly

The SONAR Truckload Rejection Index unexpectedly reached 14% in October, marking a significant deviation from usual seasonal patterns. This rise isn't attributed to a demand surge, but rather a nationwide supply shortage and market imbalance. Key regions such as Los Angeles, Harrisburg, and Atlanta are experiencing heightened disruption, with spot rates surging.

Zach Strickland, presenting the data in a SONAR Market Update, described this as a significant and unexpected development. The surge is notable because the SONAR Tender Volume Index shows no demand-side increase, indicating the issue is solely due to a lack of supply.

Market expert Strickland pointed out that mid-October is typically a brief respite before the holiday rush, making the current situation particularly alarming. Elevated rejection readings were observed across multiple regions, including Knoxville, Harrisburg, Memphis, Atlanta, Green Bay, Des Moines, Los Angeles, Ontario (California), and El Paso. Hub cities like Columbus, Harrisburg, and Atlanta, which usually accommodate inbound capacity from westbound lanes, are surprisingly showing signs of tightening.

The surge in Los Angeles and Ontario, linked to a prolonged import peak, is of particular concern. Record import volumes were processed through the Port of Los Angeles in September, with the maritime peak described as a "prolonged plateau" rather than the usual spike. Retailer inventories, driven by just-in-time ordering, are now prompting a nationwide replenishment effort that is straining truckload capacity from the West Coast eastward.

While spot rates have not yet responded to the surge in rejections, market experts predict a rise in the National, Regional, and Flatbed Truckload Indexes within the coming week. Tender lead times are currently 3.5 to 4 days, but spot freight bookings are being made a day or less out, explaining the delay in rate index updates. In contrast, Houston is exhibiting relatively softer trends in the van market, partially alleviating the nationwide tightening.

In the refrigerated segment, Milwaukee and Stockton are showing particularly tight conditions. Despite the overall lower demand, the market remains highly volatile heading into the holiday season.