The TD Cowen/AFS Freight Index shows that economic and company-made headwinds are impacting the freight industry.
The companies project that truckload freight costs will increase slightly by the end of the year, and predict that the costs of both ground parcel and express parcel are also expected to climb in Q4. The indexes measure costs against a January 2018 baseline.
Trucking outlook
The firms project that the Truckload Freight Index will climb to 6.1 percent above the January 2018 baseline in Q4 2025; if that comes to fruition, it would represent a 0.1 percent increase quarter on quarter, and a 0.9 percent increase year on year.
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The report noted that, despite marginal improvements year on year, if the index hits 6.1 percent in Q4, that would still be nearly 7 percentage points lower than it was in 2022. While the data shows some forward movement on linehaul cost per shipment—which is up 1.5 percent year on year—and miles per shipment, up 0.6 percent quarter on quarter, experts still have concerns over the stability of truckload shipping.
The report notes that the “truckload market continues to face headwinds from sluggish demand and shifting trade policies, which do not indicate relief from the excess capacity that has suppressed rates for nearly three years.”
While truckload continues to waver, less-than-truckload (LTL) shipment pricing has remained relatively stable. The index shows that “softer industrial demand and reduced heavy-freight activity” saw weight per shipment for LTL dropping 7.4 percent year on year; despite that trend, cost per shipment declined by only 0.7 percent in the same period.
Still, LTL isn’t out of the woods. TD Cowen and AFS’s data shows that fuel surcharges assigned by the carrier have seen a 5.6 percent uptick since Q2, alongside a 1.3 percent increase in the average length of a cargo trip.
For those reasons, TD Cowen and AFS are projecting that, despite headwinds, the LTL Freight Index will see a 1.1 percent year on year increase to 64.8 percent, down slightly from Q3’s high of 65.1 percent.
Mich Fabriga, vice president of LTL pricing for AFS, said the LTL market will continue to hone in on profitability as uncertainty pervades.
“Even as LTL networks pick up smaller shipments and experience some turnover, carriers have kept a keen eye on profitability and network efficiency,” Fabriga said in a statement. “Emphasizing yield rather than volume has proven to be a successful formula for carriers in previous down freight cycles and rates are again proving resilient, even in the face of negative indicators like the ISM Manufacturing PMI index showing contraction for 33 of the last 35 months.”
Parcel shipping expectations
While the indexes show that LTL and truckload are generally influenced by macroeconomic factors like inflation and tariffs, they suggest that parcel, ground parcel and express parcel indicators have more to do with the changes being made by logistics companies—particularly UPS and FedEx.
The companies each announced demand surcharges for the 2025 holiday season earlier this year, which includes additional handling and large package charges, alongside the demand charge.
Mingshu Bates, chief analytics officer and president of parcel at AFS, said that shippers and logistics liaisons should expect to see the fees and surcharges to continue.
“While parcel pricing has become increasingly complex and unpredictable, shippers can still count on FedEx and UPS to move in lockstep with various rate adjustments and recalculations that steadily raise the industry baseline,” Bates said in a statement. “The cumulative impact of steady fuel surcharge adjustments and other prices have enabled carriers to maintain elevated package rates while selectively offering targeted discounts to attract profitable volumes.”
FedEx and UPS’s changes, compounded with President Donald Trump’s changes to de minimis, have increased costs year on year for the express parcel market, which is expected to fall 2.1 percent above the January 2018 baseline, which is up 3.9 percent year on year.
Ground parcel, too, is expected to see higher cost-per-package rates in Q4; TD Cowen and AFS’s data shows that demand surcharges and other FedEx and UPS changes—like dimensional measuring rounding rules, which will see all parcel measurements rounding up to the nearest inch, rather than down—are at the heart of that change. The index is expected to come in at 32.4 percent above the January 2018 baseline, which would reflect a 4.8 percent year on year increase and a nearly 1 percent quarter on quarter increase.
Andy Dyer, AFS’s CEO, said remaining resilient will be key for freight carriers and shippers alike as the industry continues to see curveballs headed its way.
“While the initial shock and awe of high-profile tariff announcements has subsided from earlier this year, businesses continue to grapple with the effects of shifting policies,” Dyer said in a statement. “We’re also in year three of an unusually long downward freight cycle, and carriers are relying on hard-won lessons of the past to prioritize profitability and hang on in a soft environment.”
