Have Los Angeles turndowns found a bottom?

The Los Angeles freight market may have found the bottom of its customary July ‘mellowing’ as inbound container rates surged on tariff fears, but there’s still very little clarity as to how big a risk more protectionism might be. This morning’s strong retail numbers suggest that the current expansion cycle still has legs; the next few weeks will tell us how strong fall will be for truckload rates. After the July 4 holiday, the rate of turndowns outbound from Los Angeles began contracting: SONAR’s L.A. outbound tender rejection index (OTRI.LAX) fell from 18.55% to 14.59% by July 13. At that point, the turndown rate stabilized, and improved to just over 15%. The outbound tender rejection index measures the percentage of all outbound loads tendered from a certain market that is rejected by carriers. The direction and magnitude of movements in OTRI point to the balance of supply (truck capacity) and demand (freight)—the index increases when carriers reject more loads because they don’t have the capacity or are trying to take advantage of higher rates on the spot market. Abrupt changes in OTRI can also be leading indicators of spot rate volatility.