For fleets, the annual major challenge following International Roadcheck 2023 is getting their leased-on drivers back out of the house and on the road in position to haul carriers’ regular contract freight. This impact of equipment repositioning is currently showing up more dramatically in markets that were tight during the Roadcheck event.

These markets, which have been slowly shedding capacity since October, currently lack the excess that logistics providers were utilizing to comfortably service freight. This is showing up in rising spot rates by DAT (+4.2% increase last week) and Truckstop.com (+2.9%). This pressure coinciding with the upcoming Memorial Day holiday will continue to raise tender rejections, push more freight to the spot market, and we will see spot rates continue to lift further off the floor.

Post-Roadcheck, pre-Memorial Day and Federal government debt ceiling negotiations make for an interesting freight market. Dig deep in this week’s Redwood Report.

Watch This Week's Redwood Rundown

Displaced capacity is the name of the game given the truck repositioning from both Roadcheck and the long Memorial Day weekend. The southern half of the country is particularly feeling the squeeze. Check out a quick 2-minute overview in this week’s Rundown:

[embed]https://vimeo.com/829944235[/embed]

Memorial Day 2023 Market Watchouts & Debt Ceiling Negotiations

In the market, we have seen the OTRI (Outbound Tender Rejection Index) rise 16% over the last week for the highest tender rejection rate since March 28. This tender rejection rate is still low, and heavily reflects last week’s pressure, but looks poised to continue to grow through the weekend.

We have speculated all year that we would see increased volatility from event-driven capacity withdraw from the market following Roadcheck’s disruption, and Memorial Day weekend will certainly test that speculation. If capacity comes off the road and shippers must increase spot market pricing rather than risk service failures, then we can expect to see similar behavior through the end of the quarter and the Fourth of July holiday. Whether that is enough to keep carriers in the market as they face declining contract rates and spot rates that remain below the cost to operate even with the recent lift off the floor remains to be seen.

On the horizon and far beyond the reach of the freight market, the Federal government remains at an impasse on debt ceiling negotiations. The X-date, the day the U.S. government says it can no longer fulfill all its financial obligations, is rapidly approaching (with much debate on that date being either early June all the way to August). A Federal default on the debt would spark an almost instant recession during an already difficult economic recovery from the last year of rate hikes.

Top 3 Charts for the Week

1. FreightWaves SONAR Outbound Tender Rejection Index

Finally, a lift off the floor, but just a Roadcheck/holiday blip on the radar? This week: 3.23%, last week 2.61%.

Data shared with permission from FreightWaves.

2. FreightWaves SONAR Inbound Ocean TEU's Index

This leading indicator for import freight volumes is at 117.77, the highest reading for freight volumes being booked to the U.S. since October.

Data shared with permission from FreightWaves.

3. DAT National Load-to-Truck Ratio

Here’s a look at Roadcheck impacts in a nutshell, demonstrating the sudden though likely short-term constraint in capacity.

Data shared with permission from DAT Freight & Analytics.

Looking for Even Deeper Market Insights?

Want to know more about how the Memorial Day weekend impacts capacity, plus a deeper dive into specific markets?

Follow the Redwood LinkedIn page to catch our Redwood Rundown videos on Tuesdays, plus coming soon you'll be able to sign up for exclusive deeper weekly market insights via email on Wednesdays. And keep checking back to our insights blog for these weekly highlights.