Contract Rates Continue to Fall: Capacity in Danger

The dry van truckload market is currently experiencing a notable dip in contract rates, mirroring a broader trend seen across both contract and spot rates in the sector. Contract rates have been in a steady decline since the explosive demand growth instigated by the pandemic began to recede. As we settle into a buyer's market characterized by an abundance of supply, the downward pressure on contract rates continues. The current Outbound Tender Reject Index (OTRI) stands at a mere 3.5%, indicating fierce competition among carriers for business and driving contract rates even lower. The market outlook suggests these rates could continue to fall further unless there is a significant capacity withdrawal or a sudden spike in demand.

Additionally, while spot rates are predicted to remain broadly stable, a possible increase around the holiday season could impact the contract-spot rate spread.

Source: FreightWaves