What is this madness?
Have you ever seen the tide go out exceptionally fast and at a time when it should not be going out at all?
Right, that one time right before a tsunami kicked your ass.
SONAR is showing us a very interesting market dynamic that does not play out that often. At least to this level of impact.
Normally, we see truckload tender rejections rise when volumes go up. This is not happening right now, due mainly to the rapid descent and the relative elevation from which they descended.
The SONAR chart is showing the outbound tender rejection index, or OTRI, continuing to fall and the outbound tender volume index, or OTVI, rising since Easter week and sticking. If not just for the moment.
The other dynamic in this SONAR dashboard is the chart showing the contracted van rate per mile, or VCRPM1, compared to the spot dry van rate per mile.
So, what are these indices and charts telling us? Shippers are not falling down their routing guides and into the spot market.
In fact, they aren’t even hitting the lower-tier carriers in their routing guides.
This is causing a more rapid descent in spot rates as the scraps going to spot market load boards are getting thin.
Tsunami you say?
When spot rates drop below contract rates, we will see a flood of volume fall out of the routing guides. If this occurs simultaneously with China opening up again…TSUNAMI!
Peace and Love