The Outbound Tender Volume Index (OTVI.USA) has gone horizontal below its March 2018 starting point of 10,000. The index currently sits at 9,690.61, which is slightly above its yearly comparable by less than 1%. Through the first two weeks of the year, we haven't seen the year-over-year growth we expected due to the current spread between contract and spot rates. OTVI is an index of accepted tender volumes at contract rates.

The current spread between contract and spot rates is much higher than the spread this time last year. Our volume index last year didn't hit 10,000 until the end of February. This is not only because freight volumes were relatively weak but also because many carriers were still looking to accept spot rate loads due to the spread being much tighter between contract and spot. This led us to believe OTVI may exhibit strong year-over-year growth in the first two months of 2020, but that expectation has not come to fruition.

"Capacity is beginning to normalize after holiday demand strained supply," said Michael Fullam of Reed TMS Logistics. "We expect this trend to continue through mid- to late February. Spot market demand has decreased as route guide compliance increases, creating more stability in the transactional marketplace. Looking ahead, we are expecting incremental increases in spot market rates. More specifically, however, we are planning for a significant surge in floral freight in Florida, as well as import produce volume off the East Coast throughout February. We expect rates to increase due to demand pressures in these channels."

Six of the 15 of the markets FreightWaves tracks were positive on a week-over-week basis. Markets with the largest gains in OTVI.USA were Seattle (13.16%), Miami (7.58%) and Savannah, Georgia (4.72%). Markets with the largest declines in OTVI.USA were Memphis, Tennessee (-11.23%); Houston (-6.45%); and Fresno, California (-5.58%).

SONAR: OTVI.USA

SONAR: OTVIY.USA

OTRI settling into 7% range, approaching flat year-over-year

After peaking at 14.25% on Christmas Day, the Outbound Tender Reject Index (OTRI) has slipped to 7.71%. This is three straight weeks of declining tender rejections off the peak. The fall was expected as drivers got their wheels turning again after spending time at home over the holidays. As shown in the chart below, a kindred decline occurred last year.

The index experienced a similar but more significant fall at the beginning of 2019, when the index dropped by half in just four weeks. We expect a similar acceleration to the downside in the coming weeks, but for now OTRI is still near 2019 highs.

SONAR: OTRI.USA

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