The freight market is characterized by volatility. Some of its ups and downs are expected, attributed to annual occurrences like produce season or holiday retail peaks. Other shifts are difficult to impossible to predict, stemming from regional natural disasters or widespread global crises. Either way, understanding real-time tender volumes is a crucial part of formulating an appropriate — and effective — supply chain response.
Tender data is an indicator of raw demand. The outbound tender volume data provided in FreightWaves SONAR allows companies across the supply chain to visualize freight movement, enabling them to anticipate market changes and respond appropriately.
Companies can access up-to-date outbound volume information via SONAR’s Outbound Tender Volume Index (OTVI). The index tracks electronic offers from shippers (think CPG, retail, and food and beverage companies) to truckload carriers, and data can be visualized on either a nationwide or market-specific basis.
On the most basic level, understanding tender data means understanding market dynamics, a must for any company involved in moving freight. Tender data allows companies to anticipate future freight movement, in stark contrast with payment data, which provides historical context. FreightWaves is currently the only provider of tender data analytics.
OTVI allows logistics leaders to monitor outbound volumes in the markets they operate in. Shifts in freight volumes tend to cause changes in capacity, applying upward or downward pressure to carrier rates. If a market’s outbound volume suddenly increases or decreases, users can see which types of loads will be affected based on length of haul.
In addition to being accessed by market, OTVI can be broken down by five different lengths of haul. These include city/local loads (COTVI), short-haul loads (SOTVI), midhaul loads (MOTVI), tweener loads (TOTVI) and long-haul loads (LOTVI). An increase in freight volumes on a particular length of haul could tighten capacity for that lane, increasing carrier rates, whereas a decline in freight volumes could loosen capacity, causing carrier rates to fall.
For shippers, having access to outbound volume data on so many levels means being able to immediately identify capacity shifts, giving them more lead time to get threatened loads covered in tight markets, take advantage of loosening markets and generally anticipate pricing changes.
These indices also offer brokers a competitive advantage, allowing them to analyze destination markets by lane. Brokers can see if the volumes shifting from the market are local, short, mid- or long-haul loads. This level of understanding helps brokers secure the best rates possible for the shipper customers.
Beyond simply understanding outbound volumes, OTVI can be used in conjunction with other SONAR indices — including the Outbound Tender Reject Index (OTRI) — to delve deeper into the state of the market. For example, looking at OTVI alongside OTRI length of haul indices can help users understand both volumes and rejection rates based on the distance a load travels from a market.
The deeper a shipper or broker understands the ins and outs of the freight market, the more competitive they can be, despite the volatility and unpredictability that color the logistics industry.
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