Corporate decision-makers are gathered in smoke-filled boardrooms, but instead of discussing new product launches, they're analyzing the latest U.S. tariff policies and how they might trigger a domino effect across supply chain stability. With consumer confidence waning and freight market recovery appearing increasingly uncertain, the latest TD Cowen/AFS Freight Index report emerges as a crucial tool for navigating these turbulent times.
The Q2 TD Cowen/AFS Freight Index, jointly released by TD Cowen Inc. and AFS Logistics LLC, provides an in-depth analysis of how tariff changes and declining consumer confidence are impacting various freight modes. Leveraging AFS Logistics' extensive freight data resources and machine learning technologies, the index offers comprehensive insights into current market conditions while incorporating macroeconomic factors and recent general rate increases (GRIs) from major parcel carriers.
Key Market Observations
"Tariffs have become a focal point for businesses and society at large," noted AFS Logistics CEO Andy Dyer. "When combined with uncertain macroeconomic conditions, these policy changes create widespread market uncertainty and caution. These factors indicate that the prolonged soft demand in domestic transportation markets persists."
Q2 Freight Mode Analysis
1. Truckload Shipping
- Q2 2025 Performance: Rates exceeded expectations, standing 5.9% above the January 2018 baseline due to inventory pull-forwards to avoid tariffs, wildfires, natural disasters, and ongoing capacity adjustments.
- Regional Shift: The move toward shorter hauls (500 miles or less) has reduced total costs per shipment to just 5% above pre-pandemic levels—the lowest point in over three years.
- Q2 Outlook: Rates expected to decline slightly to 5.5% above baseline, marking the ninth consecutive quarter within the 4.3%-5.9% range.
2. Parcel Shipping
- Pricing Strategy Changes: The era of predictable annual rate hikes is over. FedEx and UPS have implemented more frequent, subtle pricing adjustments amid weak demand.
- Competitive Landscape: USPS's expansion of priority next-day service to 54 markets intensifies competition as carriers optimize ground networks.
- Q2 Outlook: Per-package rate index projected at 3.1%, down 0.3% quarter-over-quarter.
3. Less-than-Truckload (LTL)
- Q1 Performance: Demonstrated pricing resilience with 1.5% quarterly and 0.5% annual growth despite economic headwinds.
- Q2 Outlook: Rate index expected at 63.4%, continuing six consecutive quarters of year-over-year growth.
Market Implications
The freight market faces unprecedented complexity from tariff policies, shifting consumer behavior, and evolving carrier strategies. Businesses must adapt through:
- Advanced data analytics for cost management
- Optimized inventory placement strategies
- Diversified carrier partnerships
- Network flexibility to accommodate regionalization trends
As the industry moves forward, success will depend on balancing operational efficiency with sustainability initiatives in an increasingly competitive landscape.