Tender Rejections Soar to 8.36%: Unraveling the Highest Surge Since June 2022
Tender rejection rates have surged to 8.36%, marking the highest level since June 2022 and a remarkable one-week increase of 190 basis points. This sharp uptick is the most significant single-week surge since 2021, as reported by SONAR’s Outbound Tender Reject Index (OTRI.USA).
Santa is Bringing Presents This Year
The current increase in tender rejections starkly contrasts the subdued holiday seasons of the past two years. While a seasonal rise is usually anticipated as the Christmas holiday approaches, this year’s surge is unprecedented in recent memory.
- In 2022, rejection rates saw a 34-basis-point drop from Nov. 1 to Dec. 18 (4.45% to 4.11%).
- 2023 experienced a modest 65-basis-point increase during the same period (3.5% to 4.15%).
- This year, we’ve witnessed a staggering 314-basis-point jump from 5.22% on Nov. 1 to 8.36% on Dec. 18.
Tender rejections are also up 425 basis points year over year. It’s a massive Santa rally!
The Santa Rally is Market-Wide
Great news: all major freight markets are participating in the rally. Rejection rates in Los Angeles, Dallas, Atlanta, Chicago, and Harrisburg, Pennsylvania, are all joining in, indicating a market-wide event rather than a single market anomaly.
Historical Context
To put this in perspective, this is the highest level of market-wide tender rejections since June 2022, a time when many were still in denial about the impending freight recession, now known as the Great Freight Recession. The current “tender rejection short squeeze” has rapidly pushed rates through the 7% mark into the mid-8% range.
Implications for the Industry
This sharp movement in tender rejections, aligning closely with calendar events, reinforces the view that the Great Freight Recession is decisively coming to an end. For logistics professionals and supply chain managers, this trend suggests a need to reassess strategies and prepare for a potentially tightening capacity market.
Looking Ahead
We anticipate that tender rejection rates will continue to climb throughout the holidays. With the market clearing 8%, carriers now have pricing power, at least for the time being.
If tender rejections maintain their upward momentum as we head into the first quarter, shippers who haven’t been planning contingencies will certainly regret it.
As the freight market rebounds, industry stakeholders should closely monitor these developments and adjust their operations accordingly.
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