Data Swings During the Holidays

By Nate Clayville, Corporate Economist

The last few weeks of seemingly volatile swings in the data reported in the recent Spot Market Insights reports has left more than a few of our subscribers scratching their heads. And who could blame them? The report does indeed show large fluctuations in the last several weeks of 2016 that look quite out of place in a relatively stable fourth quarter.

In order to better understand the drivers behind these fluctuations it is important to do a little unpacking of the Spot Market Insights report and the data that feeds into it. collects a wealth of data as a byproduct of the services it offers. Load matching, posting, searching, and assurance services all have hidden bits of information that can be used to judge the health of the broader industry. Spot Market Insights is a weekly report that disseminates this valuable data, giving subscribers exclusive insights into the current state of freight.

While Spot Market Insights is filled with data about rates, load turnaround times, fuel prices, and other useful information, the real meat of the report is the Market Demand Index (MDI). The MDI can be roughly interpreted as the ratio of available loads to available trucks. It can be a valuable indicator of prevailing trends in freight transportation. One thing that can be easy to forget about this weekly index is that it’s not seasonally adjusted.

Seasonal adjusting is the process of taking a data series and mathematically smoothing out the dips and spikes that occur at the same times each year. Any change in an index that is not seasonally adjusted can be partly attributed to reoccurring cyclical events, and partly due to other events that are not cyclical in nature. Seasonally adjusted datasets are designed to eliminate the reoccurring cyclical changes, leaving only the ‘real’ changes, which can be analyzed, explained, and modeled.

Because of the benefits of seasonally adjusted data, many analysts are now accustomed to seeing seasonally adjusted indices. The MDI is a different that many other datasets, though. The MDI is widely used by individuals in the freight industry for things like forecasting nominal rates for use in contracts, identifying opportunities by region and trailer type, and benchmarking and comparing their own businesses against the broader market. For these uses, non-seasonally adjusted data just makes more sense.

This brings us back to the recent volatility in the reports. It should be no surprise that the week of Thanksgiving tends to be more active in load postings, as shippers, retailers, and manufacturers scramble to move goods around in anticipation of consumer spending on Black Friday. Then, almost everyone takes time off later in the week, and posted loads and trucks drop to some of the lowest levels of the year. Unsurprisingly, we see the same trend during the week of Christmas.

This year, Thanksgiving fell in week 48, when the MDI increased by nearly 33% over the week before. The MDI returned to more normal levels in the week following the surge, leading to a contraction of 17%. Then, the MDI surged again during the week of Christmas, increasing by more than 19%. It can be expected that the index will normalize over the next few weeks, which will likely produce another seemingly-volatile decrease. These large increases and decreases are left in the report, to be used by those in the industry that need to better understand the cyclical volatility.

These strong weekly swings were not outside of the expected bounds, considering the holiday-driven seasonality. We maintain our belief that loads, rates, and the MDI will continue to grow throughout 2017, albeit at a modest rate. The year will likely be made up of both up and down weeks, but the down weeks will likely be fewer and more subdued. When unexpected surges and contractions do occur in the MDI, don’t forget to check your calendar to see if there was a recent holiday.

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Disclaimer: This post includes forecasts, projections and other predictive statements that represent’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients, and other factors. They involve risks, variables and uncertainties. Actual performance results may differ from those projected in this publication. Consequently, no guarantee is presented or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein.
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