Freight Market Insights: Navigating the Road to Recovery in 2024


Published June 22, 2023

The world of freight and logistics is a dynamic one, characterized by constant fluctuations in supply and demand. As we step into the realm of 2024, it’s crucial to examine the recent trends and insights that provide a roadmap for carriers and shippers alike. In this article, we’ll delve into the data from the FreightWaves SONAR data platform to understand the current state of the freight market and what the future may hold.

The Turning Point

May 14: A Pivotal Date

Tender rejection data within the FreightWaves SONAR platform has been a beacon of hope for carriers. It tells a story that began on May 14 when the freight market hit its lowest point. Since then, conditions have been gradually improving, offering a glimmer of optimism for those in the industry.

Understanding OTRI

The Outbound Tender Rejection Index (OTRI) is a key metric in assessing the balance of supply and demand in the trucking industry. It measures the percentage of truckload freight that is rejected. In simple terms, supply refers to the number of available trucks in a market, while demand is the number of loads tendered.

What Tender Rejections Reveal

Insights from Tender Messages

Tender rejection data is derived from “tender” messages exchanged between shippers and motor carriers. When a carrier rejects a tender, it signifies that they have alternative options for that truck. Higher rejection rates indicate that the balance is shifting in favor of trucking fleets.

A Promising Quarter

The current data suggests that motor carriers are poised for a stronger quarter compared to the previous year. Tender rejections are on track to surpass last year’s numbers, potentially marking a significant upswing. It’s worth noting that the current market conditions are reminiscent of 2019, a year characterized by market strength.

The Waterfall Theory of Freight

Strength in Volumes

The Waterfall Theory of Freight, which tender rejection data monitors, suggests that larger carriers are the last to be affected by a slowdown and the first to witness a market rebound. As indicated by the SONAR chart, volumes have been steadily increasing throughout the year. This bodes well for the trucking industry and hints at the possibility of a robust peak season.
While improvements are underway, there remains an issue of over-capacity in the market—too many trucks chasing too little freight. This imbalance is expected to correct itself over the coming months.

The Role of Capacity

The freight rate cycle is closely tied to the availability of capacity in the market. As capacity adjusts to meet demand, the cycle accelerates. Rates tend to move higher as the market emerges from challenging periods.

Brokers vs. Shippers

The next phase of the freight cycle may pose challenges for freight brokerages. Many shippers have shifted their preferences to asset-based carriers, resulting in lost volume for brokers. Lower volume equates to lower revenue for brokers, impacting their profitability.

The Outlook for 2024

A Positive Outlook for Carriers

Conditions for carriers could see a significant improvement in the second quarter of 2024. This could potentially give carriers the upper hand in negotiations with shippers.

Preparing for the Future

After enduring over 18 months of challenges, carriers should prepare for higher volumes and rates. This involves optimizing their operations, reducing costs where possible, and being ready to provide volume and service to both existing and new shippers.

Preparing for Market Changes

Shippers, too, should prepare for market shifts. This can be done by benchmarking their freight costs against data, securing contract rates, or utilizing index-linked contracts to manage rate and capacity risk.

FreightWaves SONAR: Your Insights Platform

In conclusion, the freight industry’s resilience and adaptability have been evident throughout challenging times. As we look ahead to 2024, the data from FreightWaves SONAR provides valuable insights to navigate the complexities of the market. The key is to stay informed, anticipate changes, and be prepared for the road ahead.