Did you know? You can measure trends and changes in Outbound Tender Rejection Rates based on length of haul.
What is it?
Outbound Tender Rejection Index (OTRI) rates are measurements of carriers’ willingness to accept the loads that are tendered to them by shippers under contract terms. OTRI is expressed as a percentage of loads rejected to total loads tendered. OTRI can be viewed at a national, regional, state or market level, and can be broken down by both trailer type and length of haul.
Example: A market has 100 tendered loads accepted, and 4 loads rejected.
OTRI = 4 / 100 = .04 or 4.00%
Outbound Tender Rejection Rates by Length of Haul
OTRI can be broken down by five different lengths of haul allowing SONAR users to see load rejection rates based on the distance a load travels from the origin. These include city/local loads (CORTI), short-haul loads (SOTRI), mid-haul loads (MOTRI), tweener loads (TOTRI) and long-haul loads (LOTRI).
In the chart above, SONAR is comparing the main OTRI index for the Dallas market to three different length of haul rejection rates, city (local) loads (COTRI.DAL), short-haul (SOTRI.DAL), and tweener haul (TOTRI.DAL).
Who needs it?
Carriers: OTRI by length of haul gives carriers a view on spot market activity based on five different ranges of how far loads deliver from the origin. When spot market rates increase, you will see an increase in rejection rates as carriers decline contracted loads in search of higher paying freight. When the spot market declines, you will see a decline in rejection rates as carriers settle back and accept their contracted freight.
Brokers: Volatility in a market can lead to higher margins for brokers. Brokers are able to pinpoint volatile markets along with the lanes that are increasing the volatility within a market, and target spot market loads. Length of haul rejection rates can also help brokers make decisions to accept or reject loads on their contracted freight, based on high or low tender rejection rates.
Shippers: Fluctuations in spot rates can alter shippers’ ability to find capacity to cover their loads. Current trends in OTRI by length of haul can help shippers make decisions such as extending or reducing tender lead times, or search the spot market for low-cost capacity based on how far away a load is being delivered to ensure capacity for their loads.
What can I do with it?
OTRI – length of haul tells SONAR users what carriers are more willing to accept in each mileage break. OTRI is more indicative of the general market itself as it will describe which lengths of haul are available and desirable. If carriers are rejecting generally desirable regional freight with more frequency, it is a sign that market capacity is tightening. Changes in rejection rates can indicate a fluctuation in spot market rates on a per lane basis.
- COTRI – City/Local. Loads that have a <100-mile length of haul
- SOTRI – Short-haul. Loads that have a 100-250 mile length of haul
- MOTRI – Mid-haul. Loads that have a 251-450 mile length of haul
- TOTRI – Tweener length of haul. Loads that are 451-800 mile length of haul
- LOTRI – Long-haul length of haul. Loads that are 801+ mile length of haul
In the chart above, the Medford, Oregon market shows an OTRI of 8.44%, but loads that are moving 251 miles to 450 miles (MOTRI.MFR) from the origin are being rejected at 27.24%, indicating that capacity is tight for mid-haul loads, and carriers are demanding a higher rate to run loads within that mileage range.
Show me how!
1) View Mid-haul outbound tender rejection rates at a high level to see which markets have elevated tender rejection rates for each length of haul.
- Markets that are shaded a darker blue indicate a higher percentage of contracted loads being rejected in a market.
- Markets that are shaded a light blue or white indicate a lower percentage of contracted loads being rejected in a market.
- In the Map’s widget, you can edit the map layers to any of the five lengths of haul. (COTRI, SOTRI, MOTRI, TOTRI, and LOTRI)
2) View the historical trends and changes in the outbound tender rejection rate index.
- Markets with positive trends indicate that capacity is tightening, and spot market rates are on the rise.
- Markets with negative trends indicate that capacity is loosening, and spot market rates are declining.
Pro Tip: Use your SONAR OTRI length of haul indices in conjunction with OTVI, HAUL and OTLT indices to optimize freight rates.