Import bookings face a decline, putting freight demand in a precarious position
The freight market is experiencing unforeseen shifts this year, with business decision-making clouded by erratic trade policies and related rhetoric. One of the most notable changes is the earlier-than-usual intermodal peak, which is expected to occur around late June and July, rather than the traditional September-October peak.
This early surge in imports is primarily driven by importers frontloading shipments ahead of anticipated tariff and trade policy changes, as well as efforts to buffer supply chain uncertainty through advanced inventory stocking upstream in the supply chain. Key factors behind this shift include tariff and trade policy anticipation, supply chain strategy, and a modal shift to intermodal transport.
The intermodal market, represented by ORAILL, has remained relatively resilient but may soon experience declines due to its close ties to import volumes. Container import demand (IOTI) has experienced a significant year-over-year decline over the past month, a trend that may continue as the intermodal peak subsides.
The trade war has disrupted traditional seasonal freight patterns, particularly in the import sector. China accounts for over 30% of all containerized imports to the U.S., making the drop in imports disproportionately impactful on the domestic freight market. The sharp drop in imports had minimal effect on the already deflated truckload market but noticeably impacted intermodal volumes.
Several carriers have announced peak season surcharges for September, indicating a potential rebound in intermodal volumes later in the year. However, the broader economy remains the most unpredictable variable. Current consumption remains sluggish, giving shippers ample lead time to manage inventory replenishment.
The trucking market is expected to continue its slow burn, with capacity exits. While hurricanes could temporarily disrupt freight networks, winter weather events have a more lasting impact. Holiday shipping may be chaotic if shippers are caught unprepared.
In a bid to enhance the client experience, our platform data science and product teams are releasing new datasets each week. The Chart of the Week, a chart selection from SONAR, provides an interesting data point to describe the state of the freight markets. SONAR aggregates data from hundreds of sources and provides commentary on the freight market in real time.
SONAR's Outbound Tender Volume Index (OTVI) has posted double-digit year-over-year declines, reflecting the overall sluggishness in the market. Despite these challenges, the freight market continues to adapt and respond to the ever-changing trade policies and economic conditions.
- The earlier-than-usual intermodal peak is causing a shift in the industry, as anticipation of tariffs and trade policies is driving importers to frontload their shipments and buffer supply chain uncertainty through advanced inventory stocking.
- While the intermodal market, represented by ORAILL, has remained relatively resilient, it may soon experience declines due to its close ties to import volumes, as container import demand has declined significantly over the past month.
- Several carriers have announced peak season surcharges for September, indicating a potential rebound in intermodal volumes later in the year, but the broader economy remains the most unpredictable variable, with current consumption remaining sluggish and giving shippers ample lead time to manage inventory replenishment.
