The global freight market endured a prolonged downturn throughout 2024, grappling with weak demand, excess capacity, and intense price competition. As we approach 2025, industry analysts are cautiously optimistic about emerging signs of recovery. The latest TD Cowen-AFS Freight Index Report provides critical insights into current market conditions and future projections across various transportation modes.
Part I: TD Cowen-AFS Freight Index Overview
1.1 Report Background
This collaborative report combines TD Cowen's financial expertise with AFS Logistics' extensive freight data. Since its October 2021 debut, the index has become an industry benchmark, offering predictive pricing tools for less-than-truckload (LTL), truckload (TL), and parcel shipping markets.
1.2 Methodology
The analysis leverages AFS Logistics' comprehensive freight transaction data, enhanced by machine learning models that incorporate macroeconomic indicators including GDP growth, inflation rates, manufacturing PMI, and carrier rate adjustments.
1.3 Key Findings
AFS CEO Andy Dyer notes: "While macroeconomic indicators show tentative positive signs for carriers, the fundamental market forces shaping 2024 persist. Supply-side adjustments haven't yet reached levels sufficient to counterbalance weak demand."
Part II: Truckload Market Analysis
2.1 Current Conditions
The truckload sector shows early signs of stabilization, with spot rate increases and higher tender rejection rates indicating carrier selectivity. However, contract rates remain depressed, with per-mile costs at their lowest point in eight quarters - though still 11.6% above pre-pandemic levels.
2.2 Market Drivers
- Persistent demand weakness from slowing global growth
- Oversupply of capacity from pandemic-era market entrants
- Volatile fuel price impacts on operating costs
- Regulatory changes affecting operational requirements
2.3 2025 Outlook
The Q1 2025 per-mile rate index is projected to remain stable at 5.1% above the January 2018 baseline, reflecting continued pressure from excess capacity.
Part III: Parcel Shipping Market
3.1 Pricing Dynamics
Carriers successfully implemented seasonal pricing strategies, with ground parcel accessorial charges rising 16.4% QoQ in Q4 2024. Fuel surcharge adjustments outpaced actual fuel price declines, with UPS implementing eight surcharge increases during 2024.
3.2 Competitive Landscape
Despite pricing discipline, aggressive discounting continues to pressure margins. The Q4 2024 express parcel rate index showed YoY declines, while ground parcel rates increased to 24.4% above baseline.
Part IV: LTL Market Trends
4.1 Pricing Stability
LTL rates have remained firm since Q3 2023, benefiting from Yellow Freight's market exit. However, Q4 2024 saw per-shipment costs decline 1.3%, suggesting potential weakening of carrier pricing discipline.
4.2 Future Projections
The Q1 2025 LTL rate index is forecast at 62.4%, representing slowing growth at just 0.4% above prior year levels.
Part V: Macroeconomic Influences
Global economic headwinds including slowing growth, inflationary pressures, and geopolitical risks continue to impact freight demand. Meanwhile, technological advancements in IoT and AI are transforming operational efficiencies across transportation networks.
Conclusion
The freight market enters 2025 at an inflection point, with truckload showing tentative recovery signs, parcel carriers navigating pricing complexities, and LTL providers maintaining fragile pricing advantages. Industry participants must balance operational efficiency with strategic flexibility to navigate ongoing market challenges.