Chart of the Week: Outbound Tender Lead Time – USA SONAR: OTLT.USA
Tender lead times last week hit their highest value since SONAR released tender data in 2018, averaging 3.76 days between tender and requested pickup. The previous high of 3.68 was set last year at the same time. Is this a longer-running trend or just a seasonal glitch?
Christmas is typically the seasonal peak of the Outbound Tender Lead Time (OTLT) index. Lead times increase leading into major national holidays as transportation managers tender loads for pickup for the period of time beyond the holiday. Staffing is typically limited at both shipper and carrier, meaning increased preparation and planning are required to limit disruptions to their operations.
With Christmas and New Year’s Day landing on Wednesdays, schedules are incredibly challenging to navigate, which probably helped push lead times higher than normal. The data suggests there is a longer-running trend component, however.
Lead times in 2024 were the highest on record, averaging over three days. The reasons for this are unclear, but after the pandemic, shippers may have learned the value of notifying carriers with optimal notice.
Lead times that are too short make it challenging for carriers to plan, while too long of a lead time can lead to the request getting lost or buried.
The average lead time in 2018 (a relatively tight truckload market) was 2.7 days; in 2019 (relatively loose), it was 2.61.
In 2022, lead times remained relatively elevated, averaging 2.9 days, even as tender rejection rates — a measure of available capacity whose movement correlates with trucking price changes — plummeted.
The average lead time was up even more in 2023, averaging just below three days while rejection rates averaged record lows. So what gives?
There is a little bit of a what-came-first situation with the relationship between lead times and available truckload capacity. Optimal lead times lead to lower rejection rates as carriers are better able to plan accordingly.
Sometimes shippers do not have the visibility to provide an optimal lead time, such as occurred regularly during the pandemic years of 2020-21. There is a definitive trend of increasing lead times since 2019 regardless of how easy it has been to secure a truck.
Inventory management practices have also shifted over the past few years. Shippers having been snakebit with a wave of international shipping disruptions are keeping upstream inventories (cheaper) well stocked while allowing downstream (more expensive) inventories to be leaner.
