What the hell is the difference and why should I care?
Let’s take apart the SONAR chart below and see if I can’t make some sense of it for you and we learn something together.
Charted as the baseline (red and green line) is the Contract Load Accepted Volume – CLAV. This measures the loads that contract carriers were tendered and those that were accepted by those carriers.
Think of this as the aggregated contract truckload capacity.
The Outbound Tender Rejection Index, or OTRI, is charted in green. This represents the percentage of those loads tendered to contract carriers that were rejected.
There are many reasons for the rejection of loads – not the least of which are the carrier has optionality, better loads to haul, better pricing, the capacity is tight in that market or the U.S. as a whole.
Regardless, contract capacity cannot – or is not willing – to haul the load and therefore it is rejected.
The interesting points are the variables. Variables include every single input from the capacity, to the volume of loads, to the rejections, as well as the catalysts for the fluctuations of each.
The ellipse is highlighting a significant time period to illustrate my point.
I placed a horizontal line at the index of 16180.97. This represents an educated guess as to the contracted fleets at full volume. In other words, somewhere near that number is where contracted capacity cannot accept any additional volume regardless of the rate per mile.
Look to the beginning of 2022 through April in the highlighted area; contracts were rising as rejected loads (loads not being hauled by contracted capacity) were falling dramatically. Spot market rates were also falling as fuel prices soared during this timeframe.
Meanwhile accepted contract loads were dropping and all of these trends continue to hold true today.
Why? Loads are drying up in a very dramatic fashion. We used to have a cup that was running over. Loads waterfalling down the routing guide and into the spot market.
Now we can’t fill the cup.
The cup has to shrink or someone needs to turn up the freight faucet.
Peace and love