In today's rapidly evolving business landscape, logistics serves as the vital link between companies and their customers—the arteries through which commerce flows. Behind every e-commerce transaction lies an intricate logistics network that transforms digital clicks into physical deliveries. The TD Cowen/AFS Freight Index, a joint quarterly report by New York investment firm TD Cowen Inc. and Louisiana-based logistics provider AFS Logistics LLC, provides critical insights into this complex ecosystem.
The Freight Index: A Barometer for Shipping Markets
Since its debut in October 2021, the TD Cowen/AFS Freight Index has established itself as an essential pricing tool for institutional clients. The index tracks pricing trends across three key transportation segments: less-than-truckload (LTL), truckload (TL), and parcel shipping (divided into express and ground services).
The methodology combines AFS Logistics' extensive shipping data with machine learning algorithms and incorporates both macroeconomic factors and micro-level market dynamics—including recent general rate increases (GRIs) announced by major carriers. This dual approach enables the index to provide both retrospective analysis and forward-looking projections.
"While Federal Reserve rate cuts signal positive long-term prospects for truckload and LTL carriers, our data doesn't anticipate material impact on Q4 freight pricing," noted AFS Logistics CEO Andy Dyer. "In parcel shipping, the holiday season adds complexity to an already volatile pricing environment, with low demand prompting carriers to offset pricing changes through discounts."
Key Findings Across Transportation Modes
Parcel Shipping: Unprecedented Discounts Reshape Market Dynamics
The report reveals aggressive discounting in parcel shipping, as carriers compete for shrinking demand. While fuel surcharges increased 2.3% in Q3, deeper discounts completely offset this rise—resulting in a 6.8% quarterly decrease in per-package fuel costs. The ground parcel price index fell to 20.3% above 2018 baseline levels, its lowest point since 2021, driven by a 2.4% increase in average discounts and a 7.1% quarterly reduction in per-package accessorial charges.
For Q4, the index predicts continued pricing pressure during peak season, with the ground parcel index rising slightly to 21.5% above baseline. In express shipping, higher discounts and lower net fuel surcharges reduced the price index from 4.5% to 1.6% above baseline, with a projected Q4 decline to 1.4%.
LTL Shipping: Declining Weights Meet Pricing Discipline
The LTL sector demonstrates remarkable pricing resilience despite a 1.9% quarterly decrease in shipment weights. Effective cost management and increased haul lengths limited the per-shipment cost decline to just 0.6%. The index forecasts Q4 LTL pricing at 65.0% above 2018 levels—marking four consecutive quarters of annual growth and signaling sustained upward pressure.
Truckload Shipping: Oversupply Challenges Persist
Truckload markets continue facing soft demand and excess capacity. Though linehaul costs remain 12-14% above pre-pandemic levels, they've declined year-over-year for seven consecutive quarters. The index projects Q4 truckload rates will hover near recent lows, edging up slightly to 4.9% above 2018 baseline levels.
Strategic Implications for Market Participants
The report paints a nuanced picture of freight markets: parcel carriers engage in aggressive discounting, LTL providers maintain pricing power through operational efficiency, and truckload operators navigate persistent oversupply. These insights empower shippers, carriers, and logistics professionals to make data-driven decisions in an increasingly complex environment.
As logistics evolves with technological advancements and shifting consumer expectations, tools like the TD Cowen/AFS Freight Index will grow ever more critical for navigating market fluctuations and building resilient supply chains.