Logistics managers across the nation are scrutinizing their screens, searching for clues about the freight market's trajectory. The UPS-Teamsters negotiations and Yellow Corp.'s bankruptcy have created palpable tension, but beneath these surface disruptions lies a more profound trend: weakening demand and macroeconomic headwinds are shifting bargaining power decisively toward shippers.
Amid this uncertainty, the newly released Cowen/AFS Freight Index serves as a critical compass, revealing potential cooling in the traditional peak shipping season. This joint report from investment firm Cowen Inc. and third-party logistics provider AFS Logistics LLC offers more than data—it provides strategic insights for supply chain management.
The Cowen/AFS Freight Index: Navigating Market Turbulence
First published in October 2021, the quarterly Cowen/AFS Freight Index has become an essential tool for institutional clients. The report delivers predictive pricing analysis across three transportation segments: less-than-truckload (LTL), truckload (TL), and parcel shipping (both express and ground services).
Data-Driven Forecasting
The index leverages AFS Logistics' extensive freight data combined with machine learning algorithms to create sophisticated predictive models. These models incorporate both historical trends and real-time economic factors—including recently announced general rate increases (GRIs) from major carriers.
Strategic Value
Beyond retrospective analysis, the index provides forward-looking projections that help shippers optimize transportation budgets and supply chain strategies. This intelligence enables companies to negotiate favorable rates and enhance operational efficiency during volatile market conditions.
Industry Perspectives: Challenges and Opportunities
AFS CEO Tom Nightingale observed: "While the UPS labor negotiations and Yellow's collapse have kept logistics teams vigilant this summer, softening demand and macroeconomic conditions are creating relief opportunities for shippers." This statement highlights how current market dynamics favor procurement professionals who can adapt quickly.
Mode-Specific Analysis and Projections
LTL Market: Post-Yellow Reconfiguration
- Q3 Rate Increase: LTL rates rose 2.2% year-over-year following Yellow's exit, with two-thirds of the increase attributable to shifting freight to higher-cost carriers
- Fuel Surcharges: Jumped nearly 20% from Q2
- Q4 Outlook: Rates projected to rise 59.3% above January 2018 baseline, though down 3.2% year-over-year
Parcel Shipping: Discount-Driven Competition
Ground Parcel
- Q3 Rate Decline: First annual decrease since 2019 due to aggressive discounting
- Q4 Projection: Expected 1.5% seasonal increase with 0.7% year-over-year decline
Express Parcel
- Q3 Performance: 2.3% quarterly decrease despite 14.6% higher fuel surcharges
- Q4 Forecast: 1.7% seasonal uptick matching two-year growth patterns
Truckload Sector: Stable Conditions
- Current Status: Rates rose modestly to 4.4% above baseline
- Outlook: "Relatively flat" Q4 with 4.6% baseline increase anticipated
Supply Chain Implications
The index enables companies to:
- Develop accurate transportation budgets
- Optimize modal selection and routing
- Reduce overall supply chain costs through data-driven negotiations
Conclusion: Adapting to New Market Realities
The freight market faces significant headwinds from economic uncertainty and structural changes. However, organizations that leverage predictive tools like the Cowen/AFS Freight Index can transform these challenges into competitive advantages through strategic supply chain optimization.
Future success will depend on companies' ability to monitor macroeconomic trends, embrace technological innovation, and implement sustainable logistics practices while maintaining pricing discipline during negotiations.