Flatbed market benefits from tariff uncertainty

Chart of the Week: Flatbed Outbound Tender Reject Index – USA SONAR: FOTRI.USA, VOTRI.USA, ROTRI.USA

Tender rejection rates for flatbed loads (FOTRI) spiked to 40% in March, its highest level since early 2022. Van (VOTRI) and refrigerated (ROTRI) rejections also saw increases. While some of this can be attributed to seasonal patterns, the timing suggests that tariff-related uncertainty and concerns about rising costs are playing a key role in supporting this surge in demand.

It’s important to note that flatbed freight represents only a small percentage of total tender volume. This makes it more responsive to market fluctuations – and thus one of the quickest indicators of disruption. Another reason for its heightened sensitivity is that it largely consists of contracted freight, which is typically priced lower than spot market freight.

Three primary factors are driving the current state of the flatbed market and its potential sustainability:

Seasonal trends

The flatbed market tends to awaken in the spring as construction activity picks up with warmer weather. The initial spike in demand usually impacts the spot market first, pulling capacity away from more stable contract freight. This shift leads to increased tender rejections as carriers reallocate resources.

Following the brief implementation of tariffs on Canada and Mexico by President Donald Trump – before they were paused in early March – flatbed rejections surged from around 10% to nearly 35%. While this may seem like a clear cause-and-effect relationship, it’s worth noting that FOTRI also rose from 11% to 24% in March of last year. Even in 2021, during the pandemic, there was a noticeable seasonal bump from March through July.

Market capacity shift

Truckload capacity has been declining at a notable rate over the past year. Net revocations of operating authorities have increased during the winter months. Flatbed carriers, in particular, are more vulnerable during the winter season due to decreased demand, which likely led to a disproportionate number of exits compared to van or reefer operators.

As capacity continues to contract, the market becomes increasingly sensitive to shifts in demand. While current capacity may still be sufficient for the predictable flow of freight, sudden spikes or changes in volume are more likely to cause disruptions in carrier networks – something already seen in the van and reefer segments.

Tariff-driven activity

As previously mentioned, tariff threats – particularly the early, aggressive stance on duties involving Canada and Mexico in February – have had an outsize impact on the flatbed market. With high exposure to industries like automotive and lumber, companies are clearly accelerating shipments to avoid potential cost increases.

Spot rates for flatbed freight have been rising since mid-February. Because much of this freight is moving outside its typical cycle, it is increasingly routed through the spot market.

What’s next?

Two of the three factors driving the current conditions – tariff influence and frontloading of shipments – are likely transitory. If tariffs have reached their peak, their influence should begin to wane. While there’s still uncertainty around the final terms with Canada and Mexico, resolution should bring renewed stability.

The second factor, however – capacity reduction – is a longer-term issue and continues to shape the market. This suggests that while the current wave of volatility may subside, it’s unlikely to lead to a dramatic softening of the market. The broader economic outlook remains uncertain as businesses adapt to what has been a turbulent start to the year. The flatbed sector was caught off guard this time, highlighting the fact that supply chains are still far from settled.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

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