The freight market's constant fluctuations leave many industry professionals grappling with uncertainty. Market direction remains unclear, competitive pressures intensify, rising costs squeeze profit margins, and macroeconomic instability creates additional challenges.
The TD Cowen-AFS Freight Index emerges as a powerful analytical tool that provides unprecedented market insights. This comprehensive resource serves as a strategic navigation system for freight professionals, offering clarity amidst market turbulence and enabling data-driven decision-making.
Understanding the TD Cowen-AFS Freight Index
This quarterly report represents a collaboration between New York investment firm TD Cowen Inc. and Louisiana-based third-party logistics provider AFS Logistics LLC. Launched in October 2021, the index provides predictive pricing analysis across multiple freight segments:
- Less-than-Truckload (LTL) transportation
- Truckload (TL) shipping
- Parcel delivery services (divided into express and ground segments)
Methodology and Data Foundation
The index leverages AFS Logistics' extensive freight data repository, incorporating multimodal information across geographies and client types. Advanced machine learning algorithms process this data alongside macroeconomic indicators and carrier pricing strategies, including General Rate Increases (GRIs) from major parcel carriers.
Market Overview and Sector Analysis
AFS CEO Andy Dyer characterizes the current macroeconomic outlook as "mixed" for carriers, with 2024 market conditions expected to persist. While some positive indicators exist, demand-side catalysts remain absent, and capacity adjustments haven't sufficiently offset weak demand.
Truckload Market: Cautious Optimism
Despite flat demand, emerging positive signals include rising spot prices and increased tender rejection rates. However, contract prices haven't followed this upward trend, with truckload linehaul costs reaching their lowest point in eight quarters—though still 11.6% above pre-pandemic levels. The index forecasts stable per-mile rates for Q1 2025, maintaining a 5.1% increase over the January 2018 baseline.
Parcel Sector: Strategic Pricing Amid Competition
Carriers have effectively boosted revenue through tactical pricing adjustments, including new demand surcharges that increased ground parcel surcharges by 16.4% in Q4. Fuel surcharge modifications also contributed, with ground parcel net fuel costs rising 4.7% despite a 4.6% diesel price decline. However, aggressive discounting continues to pressure margins, with Q1 2025 projections showing a 4.1% year-over-year decline in express parcel rates despite seasonal GRI increases.
LTL Market: Stability Under Pressure
LTL rates have remained elevated since Yellow Freight's bankruptcy created capacity constraints, but recent data suggests potential pricing discipline erosion. Q4 2024 saw shipment costs decline 1.3%, outpacing a mere 0.3% weight reduction. Fuel surcharges dropped 3.4% overall, with net reductions reaching 5.5%. While Q1 2025 projections show continued annual growth, the rate of increase continues slowing, with just 0.4% year-over-year growth anticipated.
Strategic Value for Industry Participants
The TD Cowen-AFS Freight Index provides freight market participants with critical insights into current conditions and future trends across transportation modes. This analytical tool enables companies to navigate market uncertainties, optimize operations, and develop competitive strategies in a challenging economic environment.