Chart of the Week: City Outbound Tender Volume Index, Long Outbound Tender Volume Index – USA SONAR: COTVI.USA, LOTVI.USA
Demand for short-haul truckloads (under 100 miles, or COTVI) has grown over the past year, while long-haul volumes have declined significantly. This shift is largely due to long-haul trucking being supplanted by intermodal transport, as shippers use containers as rolling storage in response to rising inventory costs and full warehouses. Looking at COTVI can help us decode both the economy and the truckload market.
Local or “city” freight typically involves shipments in the far upstream and downstream segments of supply chains. These include intrawarehouse movements and fulfillment orders, which make up the majority of this freight category. This mileage band can serve as a strong economic indicator – provided you understand what kind of freight is being captured. Automotive and retail activity are major drivers in this segment.
In the automotive sector, many domestic supply chains are structured so that parts manufacturers are located close to assembly plants. This proximity ensures quicker access to parts and supports efficient final assembly operations.
Retail supply chains, meanwhile, include a mix of downstream fulfillment centers and upstream distribution warehouses. The rise of e-commerce over the past decade has pushed retailers to shorten delivery times for online purchases. As a result, we’ve seen rapid growth in the number of fulfillment and distribution centers across many markets.
The traditional brick-and-mortar retail model relied on staging facilities near ports of entry, with goods then transported long distances to regional distribution centers serving physical storefronts within a 300-to-500-mile radius.
Today, many retailers operate smaller, more strategically located warehouses with targeted inventories, situated closer to the end customer to enable faster direct fulfillment. The COTVI reflects demand for this final stage of movement – closest to the end user.
Markets with the highest COTVI figures include Detroit; Elizabeth, New Jersey; Houston; and Allentown, Pennsylvania. A market like Houston likely reflects both upstream drayage activity and downstream fulfillment.
Depending on the outcome of trade negotiations – particularly with China – the COTVI could experience significant changes. A drop in drayage activity would not necessarily be a red flag for the broader economy. However, a sharp decline in downstream fulfillment-related demand would be more concerning, as it would suggest weakening consumer demand, which is the backbone of the U.S. economy.
