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Yahoo
15-07-2025
- Business
- Yahoo
LTL pricing index to hit record high in Q3
A sagging industrial economy and global trade uncertainty continue to constrain less-than-truckload demand, but carriers are still pushing through rate increases. The LTL rate-per-pound component of the TD Cowen/AFS Freight Index is expected to reach a record high during the third quarter, a quarterly report showed on Tuesday. Third-party logistics company AFS Logistics and financial services firm TD Cowen are forecasting their LTL rate index to climb to a level that is 65.9% higher than a January 2018 baseline. That would be 170 basis points above the second quarter reading and 130 bps above the prior peak set during the freight boom that concluded in 2022. If the forecast holds, the index would be up on a year-over-year comparison for a seventh straight quarter. 'The continued resilience of the rate-per-pound index shows the effect of carrier pricing discipline, and the upcoming NMFC [National Motor Freight Classification] transition to a density framework should equip carriers with another method to tightly manage freight classification and pricing,' said Aaron LaGanke, vice president of freight services at AFS, in the report. (Changes to the National Motor Freight Traffic Association's classification system will take effect on Saturday.) Cost per LTL shipment fell 2.9% y/y in the second quarter but weight per shipment was off 5.1% y/y, 'indicating that carriers are holding firm on pricing and emphasizing revenue management strategies,' the report said. Sequentially, cost per shipment was down 1.6% but weight per shipment (down 1.8% from the first quarter) and fuel surcharges (down 1.3%) were headwinds, which were offset by a 3.6% increase in length of haul. The report is in line with second-quarter updates in early June that showed LTL carriers continued to realize y/y yield increases in April and May. Truckload data from the index, however, continued to show depressed trends. The TL rate-per-mile component of the TD Cowen/AFS index is expected to decline 40 bps sequentially in the third quarter to just 5.6% above the 2018 baseline. That would mark 10 straight quarters of trough-like conditions for the pricing dataset after peaking at 25.7% in the first quarter of 2022. Truckload linehaul cost per shipment was up 1.7% sequentially in the second quarter, but the increase was driven by a 1.8% uptick in miles per shipment. 'Ongoing trade and tariff uncertainty is hampering the truckload market's recovery from the freight recession that started three years ago,' the report concluded. The LTL earnings season kicks off on July 25 when Saia (NASDAQ: SAIA) reports second-quarter results before the market opens. AFS Logistics is a non-asset-based 3PL providing audit and cost management services, managed transportation, and freight brokerage. It has visibility into more than $39 billion in annual freight spend. More FreightWaves articles by Todd Maiden: June produces mixed freight trends, recovery remains 'elusive' Carrier Logistics automates LTL shipment data entry ArcBest touts results from EV semi pilot The post LTL pricing index to hit record high in Q3 appeared first on FreightWaves.
Yahoo
22-04-2025
- Business
- Yahoo
Tariff concerns weigh on freight recovery: report
This story was originally published on Trucking Dive. To receive daily news and insights, subscribe to our free daily Trucking Dive newsletter. Truckload and less-than-truckload pricing showed some improvement in Q1, but tariff-heavy U.S. trade policies could prolong soft demand, according to the TD Cowen/AFS Freight Index released April 8. "Tariffs have become the topic du jour in boardrooms and beyond, and combining those policy changes with a cloudy macroeconomic picture is a recipe for the uncertainty and caution that characterize current market sentiment," Andy Dyer, CEO of AFS Logistics, said in a news release. Amid back-and-forth in tariff applications from the Trump administration, shippers have pulled inventory forward to get ahead of potential disruptions. The frontloading helped truckload rates to come in higher than expected at 5.9% above the January 2018 baseline, the report said. There was also a shift toward shorter-haul shipments, driving the total cost per shipment down to 5% above pre-pandemic levels, hitting the lowest point over three years. The downward pressure is 'indicative of a broader trend of more regional distribution and decentralized inventory positioning,' according to the report. In Q2 2025, the rate per mile index is projected to decline to 5.5% from the previous quarter, marking the ninth straight quarter with rates between 4.3% and 5.9% above the 2018 baseline, per the report. To get ahead of tariffs, retailers continue to bring as much merchandise into the country as possible, Jonathan Gold, VP of supply chain and customs policy at the NRF, said in a March press release. The U.S.' tariffs on Canada and Mexico could impact the flow of truck and rail-driven cargo between those countries. Shippers have also pulled forward cargo imports such as machinery, lumber, metals and oversized flatbed freight to mitigate tariff uncertainty, DAT Principal Analyst Dean Croke told Trucking Dive in an email in March. The LTL market, on the other hand, takes longer to feel the impacts from macroeconomic forces and changing trade policy compared to the truckload market, according to Aaron LaGanke, VP of Freight Services at AFS. At this time, LTL carriers are effectively navigating a low-demand environment and are focusing on profitable lanes, contractual relationships and reliable freight, rather than chasing volume with pricing concessions, LaGanke said in the release. 'After 26 months of contraction, the purchasing managers index finally reversed course with two months of growth early in Q1 2025, but March data shows it's back to contraction, which underscores some of the headwinds facing the freight market,' LaGanke said. The net fuel surcharge per LTL shipment increased 4%, high enough to overcome decreased haul lengths and sustained low weight. For Q2, the freight index forecasts the LTL rate per pound index to be at 63.4%, a bit of a drop quarter over quarter, but a 0.7% year-over-year increase. That would result in the sixth consecutive quarter with a positive YoY trend. Recommended Reading Elevated LTL rates begin to ease, index says Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Trump's tariffs could kick off the next leg of the yearslong US freight recession
Tariffs are expected to keep the US's long-running freight recession alive. Trucking rates have been depressed since the pandemic. One truckmaker expects the trucking market to shrink 10% by year-end. There's more rough road ahead for US trucking. Though the American freight sector has already endured a multi-year downturn, Donald Trump's sweeping tariffs could make matters worse. "Tariffs have become the topic du jour in boardrooms and beyond, and combining those policy changes with a cloudy macroeconomic picture is a recipe for the uncertainty and caution that characterize current market sentiment," Andy Dyer, CEO of AFS Logistics, said in a quarterly report. Rapid shifts in trade policy are an obstacle for those betting on an end to the so-called "freight recession," a slowdown in US trucking that began during the COVID era. With consumption booming during the pandemic years, trucking capacity exploded. This was to be short-lived, however. High interest rates and a spending pullback slashed freight demand, leading to sector-wide bankruptcies and price wars. According to AFS, the consequences continue to this day, with the truckload rate per mile index projected to hover near bottom lows for nine consecutive quarters. While the index picked up unexpectedly in the first quarter, this is likely a tariff side-effect, as customers increased shipments to boost inventory ahead of any trade conflict. Now, tariff fears are shaping future outlooks for the industry. The truckmaking firm Traton recently warned about a shrinking market in a Monday call with investors cited by Reuters. Concern about a global recession is causing US truckers to defer orders, the company said, which could lead to a 10% industry contraction by the end of this year. The fears aren't unfounded. Economists have grown nervous about a consumer pullback amid rising macro uncertainty, as tariff policy ignites fears of revived inflation. Chances of a US recession have climbed steadily last week, especially after President Donald Trump's latest volley of tariffs. Traton signaled that this could weigh on margins meaningfully in the first quarter. The freight recession has weighed on shares of US freight carriers. Consider JB Hunt, an industry bellwether, which is down 22.95% so far this year. In March, Bank of America lowered its earnings outlook for parcel sector heavyweights UPS and FedEx due to tariffs and a tough stretch of bad weather in the first quarter. Read the original article on Business Insider Sign in to access your portfolio
Associated Press
08-04-2025
- Business
- Associated Press
Tariffs and economic uncertainty cast shadow over freight markets: Q2 TD Cowen/AFS Freight Index
Shifting trade policies, low consumer confidence expected to prolong low demand and delay freight market recovery ATLANTA, April 8, 2025 /PRNewswire/ -- AFS Logistics and TD Cowen announce the second quarter (Q2) 2025 release of the TD Cowen/AFS Freight Index, a snapshot with predictive pricing for truckload, less-than-truckload (LTL) and parcel transportation markets. The latest release highlights the effects of an uncertain economic outlook and rapidly evolving trade policies weighing against a freight market recovery. Data shows truckload pricing staying at depressed levels after a small uptick in Q1, LTL pricing discipline working to keep rates flat and parcel carriers unleashing additional pricing changes to squeeze more revenue from limited volumes. 'Tariffs have become the topic du jour in boardrooms and beyond, and combining those policy changes with a cloudy macroeconomic picture is a recipe for the uncertainty and caution that characterize current market sentiment,' says Andy Dyer, CEO, AFS Logistics. 'These conditions do not indicate a shift away from the malaise of soft demand that has shaped domestic transportation markets for quite some time.' Truckload: Nine straight quarters with rates at the bottom In Q1 2025, the truckload rate per mile index came in somewhat higher than expected, at 5.9% above the January 2018 baseline. This uptick can be attributed to shippers pulling inventory forward to get ahead of the latest tariffs, along with the impact of wildfires, natural disasters and continued capacity correction. But a sustained shift toward shorter-haul shipments, defined as those of 500 miles or less, drove the total cost per shipment down to 5% above pre-pandemic levels — the lowest point in over three years, and indicative of a broader trend of more regional distribution and decentralized inventory positioning. In Q2 2025, the rate per mile index is projected to show a slight quarter-over-quarter (QoQ) decline to 5.5% — the ninth straight quarter with rates between 4.3% and 5.9% above the 2018 baseline. LTL: Carriers judiciously managing low-demand environment to keep rates elevated Despite economic headwinds and cautious market sentiment, LTL pricing continues to show strength. In Q1 2025, general rate increases (GRIs) took effect and the net fuel surcharge per shipment increased 4%, exerting enough upward pressure to overcome decreased length of haul and sustained low weight to drive a 1.5% QoQ and 0.5% year-over-year (YoY) increase in cost per shipment. For Q2 2025, the rate per pound index is forecast at 63.4%, a slight QoQ drop but a 0.7% YoY increase — the sixth consecutive quarter with a positive YoY trend. 'After 26 months of contraction, the purchasing managers index finally reversed course with two months of growth early in Q1 2025, but March data shows it's back to contraction, which underscores some of the headwinds facing the freight market,' says Aaron LaGanke, Vice President, Freight Services, AFS. 'Truckload typically feels the impact of macroeconomic forces and trade policy first, then LTL has more of a delayed reaction. For now, LTL carriers are effectively navigating a low-demand environment with a focus on profitable lanes, contractual relationships and reliable freight, rather than chasing volume with pricing concessions.' Parcel: Carriers attempt to regain pricing advantage The era of parcel price increases announced on a predictable, annual cadence with plenty of advance notice for shippers is over. Over the past 18 months, FedEx and UPS have pursued a different strategy as they fight for revenue in a low demand environment, with more frequent, subtle pricing changes that take effect more quickly. Through the first three months of 2025, UPS has already announced myriad changes, including new ZIP code-zone alignments, new fees on print and paper invoices, fees for check and wire payment, an increase to the late payment fee and a new payment processing fee. Both carriers have also continued to make fuel surcharge changes, the net result of which is the UPS ground fuel surcharge increasing 15% and the FedEx equivalent rising 12% from Q1 2024 to Q1 2025 — even as the price of diesel fuel fell 8.4% over the same period. 'These latest changes introduce even more complexity for shippers to digest and negotiate. If they overlook any one of these subtle updates, they can find themselves subject to punitive provisions like a blanket payment processing fee that's in effect a 2% price hike,' says Mingshu Bates, Chief Analytics Officer and President of Parcel, AFS. 'If you look at the state of the market, these changes fit the carriers' stated aims of prioritizing network efficiency and revenue quality. Competition from the Postal Service and regional carriers has FedEx and UPS looking to defend their slice of a soft market while trying to shift away from the discount-heavy dynamics of the past year and a half.' Despite carriers' emphasis on pricing discipline, the average discount in ground parcel increased 1.9% QoQ in Q1 2025. Yet ground parcel pricing remained exceptionally strong, as the cost per package rose 4% QoQ to a record-high quarterly average in Q1 2025, driven by rate increases, surcharge adjustments and higher billed weight. The ground parcel rate per package index is expected to decrease from 31.3% in Q1 to 29.5% in Q2 2025, which still represents a 2.6% increase YoY. Express parcel pricing grew in line with seasonal trends in Q1 2025, with GRIs and fuel surcharge increases powering a 5.2% QoQ increase in cost per package. But volume growth remains a challenge in the domestic express parcel market. This is in part driven by carriers' own success in optimizing ground networks, enabling shippers to shift volume to less expensive ground service for similar performance, but is also exacerbated by competition from an increasingly diverse carrier landscape, an example of which is USPS recently launching priority next-day service in 54 markets. Looking ahead to Q2, the rate per package index is expected to hit 3.1% in Q2 2025, a marginal 0.3% QoQ decrease and 1.4% YoY decline. About the TD Cowen/AFS Freight Index The TD Cowen/AFS Freight Index launched in October 2021, offering a unique perspective on the transportation market through its dataset and forward-looking view. Expected rate levels are derived from visibility to over $39 billion of annual transportation spend across all modes and includes actual net charges that factor in accessorials such as fuel surcharges. Past performance and machine learning produce predictions for the remainder of the quarter, set against a baseline of 2018 rates for each mode. About AFS Logistics AFS is a group of shipping strategists that helps more than 1,800 companies across 35 countries better understand their freight costs. The company has over $11 billion in transportation spend under management, and uses that data along with decades of truckload, LTL and parcel experience to help advise, optimize and manage client shipping programs. AFS provides support throughout the process of buying, planning, executing and settling transportation services, constantly assessing performance to ensure shippers only pay what they should and get the service and operational outcomes they deserve. The company was founded in 1982 and employs more than 380 teammates across the U.S. and Canada. AFS is regularly part of the Inc. 5000 list of fastest growing companies. To learn more, visit
