Rising Demand Boosts Optimism in Transportation

Rising Demand Boosts Optimism in Transportation

The number of truckload tenders is suddenly rising. This may indicate improvement in the domestic transportation industry.

The national Outbound Tender Volume Index (OTVI) indicates a nearly 7% increase in electronic bids from shippers to carriers for truckload capacity compared to last month. It’s different than usual. There was a sudden rise in 2020 due to a global outbreak.

The number of tenders typically increases from mid-May to the end of June and then decreases in July. The number of tenders decreased by 7% in July 2018. However, in July of this year, it only decreased by 2-5%.

Demand dropped sharply last year. The main story in the trucking business is that there is too much capacity. The number of tenders dropped by almost 17% from March 1 to April 30, 2022. Demand stayed the same during the summer. In the second half of the year, it dropped by another 16%. 

The OTVI hit bottom at 9,940 in February 2023. It has followed a normal path. It went up by 8% by the end of June. 2018 and 2019 saw increases before the outbreak.

Capacity Remains Abundant Despite an Unseasonable Rise in Demand and Labor Disputes

Even though demand went up in July, there has been no change in the number of refused bids or the spot market. Because there is a glut of capacity, the sudden rise in demand can be met. The national Outbound Tender Reject Index (OTRI) went from a high of 3.89% on July 1 to a low of 2.9 on July 18. By Thursday, it had gone up by a small amount, to 3.23%.

The National Truckload Index (NTI) shows that the spot rate trend has been going down by 4.3% every day since July 6. 

It’s hard to say for sure, but the recent labor disputes between LTL provider Yellow and UPS may have caused some activity in the shipping industry to try to get ahead of or deal with any potential service disruptions that could happen if either provider stopped working. 

Managers in the shipping and supply chains still remember how the quick tightening of capacity in the market in the recent past affected their businesses. It’s better to play it safe than to get hurt. 

The West Coast Leads Growth in Demand and Early Restocking for Peak Season

Growth has happened all over. The West Coast is mostly to blame for the recent rises in both long-haul dry van demand and total demand.

September and October, typically peak seasons for restocking freight, may start early this year. Shippers are taking advantage of low prices before the storm. The future is uncertain. The marine industry story fits. They need to trust their demand planning again. They haven’t done so since 2020. 

These ideas have short-term effects on the freight industry. People are spending less money. It’s hard to get money for a cause that will last a long time. 

Uncertainty in Retail, Home, and Auto Industries Despite Infrastructure Investments

Neither the retail nor the home industries give us any reason to be hopeful. There are also signs that the car business will slow down. Investments in bridges and tunnels are going up, which suggests that the infrastructure bill is working, but it’s hard to see how this affects long-distance dry van freight.

Of course, there doesn’t have to be a single, obvious reason; there could be a variety of other causes. The situation is good for the transportation business in the short run, but providers should be careful. This change from the usual for the season shows that our surroundings are still a bit crazy.

About the News of the Logistics Industry

Finally, an unseasonable upward trend in truckload tender volumes is giving domestic transportation providers the potential inflection point they have been waiting for. This is a complete break from tradition and is providing much-needed optimism for transportation providers. So, it seems that this news has a positive impact on the logistics industry.

Lading Logistics tries to make every possible change in the Logistics Industry. It also offers services like freight forwarding, ocean, train, road, air, and container shipping, as well as storage solutions, last-mile pickup and delivery, retail sales and distribution, trade automation services, and warehousing.