Tender Rejections Jump Above 14% as Labor Day Tightens Freight

Why are tender rejection rates rising faster this Labor Day?

The national Tender Rejection Index crossed back above 14% for the first time since early August, driven by the leading edge of Labor Day demand. The move is outpacing rejection rate increases seen over each of the past three years during the same holiday window, according to FreightWaves SONAR data reviewed Thursday.

The surge comes after rejection rates hovered around 13.5% through July and August. Zach Strickland cautioned carriers and brokers against reading that plateau as a sign the cycle is turning. "Stabilizing at a high level does not mean that this cycle is over," Strickland said. "I certainly don't think that the carriers out there and the brokers out there need to say, okay, we're transitioning out of this."

Strickland attributed much of the July and August demand softness to modal conversion rather than a fundamental weakening of freight volumes. Capacity has not meaningfully expanded. It has simply stopped contracting at a faster pace than new capacity enters the market, a process he said took roughly six to seven months to play out.

What's driving the modal split in spot rates?

Flatbed rates remain elevated, supported in part by data center construction activity. But the overall flatbed trend line is drifting lower, which Strickland described as a market that may be "a little bit overheated." Refrigerated rates are holding steady, benefiting from seasonal produce demand and the absence of intermodal competition that weighs on dry van.

Van spot rates are the most volatile of the three, swinging up and down in patterns Strickland said have not been seen since COVID-era market conditions. The divergence matters for small fleets: if you run flatbed, the elevated rates you saw in July and August may not hold through fall. If you run van, expect the rate swings to continue.

Intermodal has siphoned off long-haul van freight all summer, which explains part of the van volatility. Shippers who can move freight by rail are doing so to avoid truckload rates that climbed 8% since fall. That leaves van carriers fighting over shorter, less profitable loads.

How long will the Labor Day bump last?

Tender volumes dipped heading into the holiday as shippers pulled orders forward before taking vacations, a typical pre-holiday pattern. Strickland expects volumes to spike sharply once shippers return after Labor Day.

Hurricane risk, normally a significant freight disruptor this time of year, appears muted for now due to an El Niño pattern that warms the Pacific and suppresses Atlantic storm activity. That removes one potential source of emergency freight demand that can temporarily lift spot rates in the Southeast.

The broader takeaway, Strickland said, is that tight markets amplify volatility. Any incremental demand increase or supply disruption will produce outsized rate moves. "Tight markets have increased volatility," he said. "So even if we stabilize, any nuance or disruption that comes in then becomes a little bit more volatile."

What this means for a 5-truck fleet

If you run van, the rate swings are the story. Strickland expects van spot rate volatility to remain the defining market dynamic through the end of the year. That means more time spent negotiating loads, more rejected tenders when you hold out for a better rate, and more risk that the load you turned down at $2.10 per mile gets covered at $1.95 an hour later.

If you run flatbed, watch for the elevated rates to soften as data center construction slows and capacity catches up. The data center buildout added 1.5% freight volume hidden from traditional freight indexes, but that surge is finite.

If you run reefer, you're in the most stable lane right now. Produce season is holding rates steady, and intermodal can't compete on the temperature-controlled loads that make up most of your board.

Rejection rates above 14% mean capacity is tight enough that you can afford to be selective, but not tight enough to guarantee every load pays what you need. The 13.5% plateau in July and August was not a turning point. It was a pause. The cycle has not reversed, and the volatility that comes with tight capacity is not going away.