The latest Freight Index jointly released by TD Cowen and AFS Logistics serves as a barometer for the logistics industry, offering precise forecasts of future trends. First introduced in October 2021, this quarterly report provides Cowen's institutional clients with forward-looking pricing tools across key sectors including less-than-truckload (LTL), truckload (TL), and parcel shipping (divided into express and ground services).
Leveraging AFS's extensive freight data resources and advanced analytical techniques like machine learning, the index delivers comprehensive market insights. Beyond historical data, the report incorporates macroeconomic and microeconomic factors, including recently announced general rate increases (GRI) by major parcel carriers. TD Cowen and AFS emphasize that the index provides both a unique retrospective analysis and predictive outlooks.
"While Federal Reserve interest rate cuts signal positive long-term prospects for truckload and LTL carriers, our data suggests minimal impact on Q4 freight pricing," stated Andy Dyer, CEO of AFS Logistics. "In parcel shipping, the holiday season introduces additional variables to an already complex pricing landscape, with low demand driving carrier discounts that offset their own rate adjustments."
Parcel Shipping: Intensifying Discount Wars
The index reveals that sustained weak demand has triggered unprecedented discounting. Carriers are offering steeper discounts to more customers across broader service categories, including surcharges. This trend has effectively neutralized various surcharge increases, resulting in lower overall parcel shipping costs.
Concrete data illustrates this shift: Q3 carrier adjustments increased fuel surcharges by 2.3%, but "substantial discounts completely offset this growth, producing a 6.8% sequential decrease in per-package fuel surcharges." The ground parcel per-package rate index dropped significantly from 26.2% above the 2018 baseline in Q2 to 20.3% in Q3—the lowest level since 2021—primarily due to a 2.4% increase in average discounts and a 7.1% quarterly reduction in average per-package surcharges.
For Q4, fierce price competition will dominate the holiday shipping season, with major clients receiving substantially deeper discounts. This is expected to produce a modest sequential increase to 21.5% above baseline, though still representing a 1.8% year-over-year decline.
In express parcels, higher discounts and lower net fuel surcharges reduced the per-package rate index from 4.5% in Q2 to 1.6% in Q3. While U.S. Gulf Coast jet fuel prices fell 9.1% quarter-over-quarter, carriers' timely surcharge table adjustments limited their fuel surcharge reduction to 2%. When combined with discounts, net fuel surcharges declined 4.9% in Q3. The index forecasts a further 0.2% Q4 decrease for express parcels, settling at 1.4% above the 2018 baseline.
LTL: Steady Growth Amid Price Discipline
LTL data shows continuous declines in shipment weights, down 1.9% quarter-over-quarter. Carriers maintained pricing discipline, with per-shipment costs decreasing only 0.6%—supported by longer average hauls and strong carrier pricing power. Q4 pricing is projected at 65.0% above the 2018 baseline, up 0.5% from Q3 and 2.2% year-over-year. This marks the fourth consecutive quarter of annual growth, maintaining upward pressure on LTL rates.
Truckload: Weak Demand Delays Recovery
The index indicates that recent Federal Reserve rate cuts won't produce immediate truckload pricing impacts. The sector continues facing soft demand and excess capacity in the near term. Q3 marked the seventh consecutive quarter of year-over-year declines in per-shipment linehaul costs, though remaining 12%-14% above pre-pandemic levels. For Q4, the per-mile truckload rate index is expected to hover near the bottom established six quarters ago, edging up slightly from 4.6% above the 2018 baseline in Q3 to 4.9% in Q4.