Tariffs spike flatbed tender rejections
Flatbed tender rejection rates spiked just before North American tariffs took effect in early March, and they spiked again in recent days. (Chart: SONAR)
“What’s happening with flatbed rejection rates?” is the question of the hour from SONAR users. It’s easy to see why – rates shot up to the mid-30s in early March, ahead of North American tariffs (which were delayed for imports that adhered to the United States-Mexico-Canada Agreement). Flated rejection rates shot up again in recent days to a latest reading of 41.6%, ahead of additional North American tariffs set to go into effect on April 2 that may include lumber, among other things.
The SONAR team believes it’s all tariff-related.
When flatbed tender rejections spiked in early March, I dug into our raw flatbed data with help from our data team. The purpose was, first, to verify that we are, in fact, seeing that spike in the underlying data we are receiving from our data vendor – we are. Second, it was to see if there is evidence of tariffs driving the spike in rejection rates, as the timing suggests. Looking at the individual geographic markets for flatbed tender rejections (which SONAR does not publish) reveals that the spike in flatbed tender rejections is fairly widespread, with multiple markets in the U.S. showing more than one-third of the number of tender rejections we have historically seen, on average, for the U.S. as a whole. The two markets that have the highest total rejections are Dallas and Portland, Oregon. Presumably, movements to avoid tariffs are taking capacity that would normally be available in those areas.
Since the SONAR Flatbed Outbound Tender Reject Index’s inception, February 2022 was the only other time the index was as high as current levels. (Chart: SONAR)
Another factor behind the magnitude of the surge in flatbed tender rejection rates is simply that it is a thin dataset, relative to other equipment types in SONAR, which makes it prone to sharp moves. Not only is there far less flatbed volume than dry van and reefer, it is more likely to move on the spot market, and therefore not go through the tender accept/reject process. According to a SONAR employee with experience brokering flatbed loads, “Generally, flatbed doesn’t move in any sort of contract manner. There are a few contract shippers scattered around the US, but most of that freight is intra-network and agreed upon in an all-in manner.”
Truckstop spot rates have risen but not by as much as the spike in rejection rates would suggest. In addition to tariffs, spring is seasonally strong for flatbed as construction projects ramp up. (Chart: SONAR)
