Dry Van & Reefer: Market Signals You Can’t Ignore

Despite a slight decline in recent months, the dry van tender rejection rate persists at 11%, signaling a tight market, according to FreightWaves analyst Zach Strickland. He warns that the market hasn't loosened significantly, and carriers should not anticipate relief, especially with peak season approaching and capacity growth lagging.

Spot rates have stabilized after a slight dip from a July 4th peak. Cost pressures, as highlighted by J.B. Hunt earnings and most major carriers, have outpaced revenue growth, making it challenging for new owner-operators to enter the market. A four-day rate-direction map reveals that more lanes are increasing than decreasing across the country, indicating continued market fragility.

Los Angeles emerges as the most pressured market, with 67% of rates moving higher, while spot rates are around 15% above contract rates. This market pressure coincides with the looming West Coast port strike, which adds urgency to the situation due to the region's proximity to heavy retail demand corridors in the Northeast, Chicago, Atlanta, and Dallas.

Conversely, Savannah, the second-largest port complex on the Eastern Seaboard, exhibits loosening, with rejection rates dropping to nearly 6% and spot rates below contract rates. The disparity between these two markets is puzzling at this time of year, attributed to port activity concentration on the West Coast. In the refrigerated sector, rejection rates have surpassed their Labor Day peak and remain elevated, with spot rates holding steady.

The Pacific Northwest and Midwest are experiencing acute capacity constraints, primarily driven by harvest activity in Idaho and Oregon and the temporary shutdown of a major transcontinental volume lane.