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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
08-04-2025
- Business
- Yahoo
LTL rates projected to keep rising y/y in Q2, TL rates to stay ‘at the bottom'
Amid soft demand and trade uncertainty, less-than-truckload pricing remained resilient during the first quarter while truckload rates stayed depressed. The trends are expected to continue through the second quarter, a Tuesday report from 3PL AFS Logistics and financial services firm TD Cowen showed. The LTL rate-per-pound component of the TD Cowen/AFS Freight Index stood 63.8% higher in the 2025 first quarter than its January 2018 baseline. That was a 280-basis-point increase year over year and 80 bps higher than the fourth-quarter reading. The rate index is expected to dip 40 bps to 63.4% during the second quarter but come in 110 bps higher y/y, which would be a sixth straight y/y increase. '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,' Aaron LaGanke, vice president of freight services at AFS, stated in the report. First-quarter updates from LTL carriers showed yields were up slightly y/y inclusive of fuel surcharges and more notably when excluding fuel's impact. However, volumes continued to lag as tonnage was down y/y by mid-single-digit percentages for most carriers in the first two months of the per LTL shipment remained elevated in the first quarter, up 1.5% sequentially and 0.5% y/y, according to the report. Price bumps from carriers along with annual general rate increases implemented over the past several months are now fully in force for 2025, which pushed the cost index higher. Also, fuel prices rose 3% sequentially in the first quarter. The report said the average carrier fuel surcharge was up 1.8% in the period with the net fuel surcharge per shipment increasing 4%. The cost-per-shipment dataset was also influenced by a 2.4% sequential decline in length of haul and a 0.2% dip in weight per shipment (down 9% y/y). The TL rate-per-mile index was just 5.9% higher than the January 2018 baseline during the first quarter. That reading was up 70 bps from the fourth quarter and 100 bps y/y. (The index was more than 25% higher than the baseline as late as the 2022 first quarter – the tail end of the last upcycle.)The slight move up was tied to shippers pulling forward inventory ahead of tariffs as well as the impacts from inclement weather and natural disasters, all of which resulted in some capacity tightening during the period, the report said. Linehaul cost per shipment was down 1.5% sequentially in the first quarter, but miles per shipment were off 2%. A small increase in mix to favor short-haul moves (sub-500 miles) left the cost per shipment index just 5% higher than before the pandemic. The forecast calls for the TL rate index to be 40 bps lower sequentially in the second quarter but 50 bps higher y/y. That would mark nine straight quarters 'at the bottom,' the report said. The update also showed that ground parcel rates were 31.3% higher than the 2018 baseline in the first quarter (500 bps higher sequentially and 250 bps higher y/y). The dataset is expected to be 29.5% above the baseline in the second quarter. Express parcel rates remain depressed, just 3.4% higher in the first quarter than they were at the start of 2018. The forecast is for the index to be 3.1% higher than 2018 levels in the second quarter. '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,' said AFS Logistics CEO Andy Dyer. 'These conditions do not indicate a shift away from the malaise of soft demand that has shaped domestic transportation markets for quite some time.' 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:LTL stocks bloodied post-Liberation Day, estimates cut ahead of Q1 reports Turvo, SMC3 team up to improve LTL shipping process March supply chain data craters following inventory pull-forward The post LTL rates projected to keep rising y/y in Q2, TL rates to stay 'at the bottom' appeared first on FreightWaves. 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
