Imagine standing at the entrance of a vast freight market maze, with countless intersecting paths where every turn holds unknown risks and opportunities. The shadows of tariff policies, fluctuating consumer confidence, and unpredictable market demand make this labyrinth particularly challenging. In these uncertain times, how can businesses find the right path to sustainable growth?
The TD Cowen/AFS Freight Index for the second quarter serves as a professional map to navigate this complex landscape. This comprehensive analysis examines the multifaceted challenges facing today's freight market while providing valuable decision-making insights for businesses. More than just a data report, it functions as a beacon, helping companies maintain strategic clarity amid volatile market conditions.
The TD Cowen/AFS Freight Index: Data-Driven Insights Illuminate the Path Forward
TD Cowen, a prominent New York-based investment firm known for its in-depth market analysis, has partnered with AFS Logistics, a Louisiana-based third-party logistics and freight audit payment company with extensive industry expertise. By combining AFS's vast freight data across transportation modes with TD Cowen's advanced analytical capabilities—including powerful machine learning algorithms—the partners have created a robust data model.
This model goes beyond historical data review, offering comprehensive insights into market depth and breadth to help businesses better understand dynamics and anticipate trends. Like a powerful telescope, it enables companies to see distant objectives clearly and prepare for upcoming challenges.
The index incorporates both macroeconomic and microeconomic factors into its historical models, including recent General Rate Increases (GRIs) announced by major parcel carriers. This holistic approach ensures analysis accounts for both internal market shifts and external environmental impacts.
TD Cowen and AFS emphasize that their freight index provides a unique, comprehensive perspective that evaluates past market performance while forecasting near-term developments. As a dynamic analytical tool, it continuously updates to reflect market changes and support business decisions.
AFS Logistics CEO Andy Dyer observed: "Tariff concerns have become a focal point for executives. Combined with unclear macroeconomic conditions, these policy changes have created widespread market uncertainty and caution. These conditions indicate domestic transportation markets continue facing weak demand with no immediate relief in sight."
Dyer's assessment captures the current freight market reality. The convergence of tariff uncertainty, macroeconomic volatility, and soft demand presents significant challenges—making the TD Cowen/AFS Freight Index particularly valuable for strategic planning.
Key Insights Across Transportation Modes: In-Depth Analysis for Precise Navigation
The TD Cowen/AFS Freight Index provides detailed analysis across primary transportation modes—truckload, parcel, and less-than-truckload (LTL)—delivering precise guidance for business decision-making.
Truckload: The Short-Haul Shift Accelerates
As a critical economic health indicator, truckload performance reveals important market trends:
- Q2 2025 Performance: The per-mile rate index slightly exceeded expectations at 5.9% above the January 2018 baseline. This resilience stems from shippers pulling inventory forward ahead of new tariffs, wildfire/disruption impacts, and ongoing capacity adjustments.
- Short-Haul Trend: Accelerating adoption of short-haul moves (≤500 miles) has reduced per-shipment costs to just 5% above pre-pandemic levels—the lowest point in three years—reflecting growing regional distribution and inventory decentralization.
- Q2 Outlook: The per-mile index may dip slightly to 5.5%, marking nine consecutive quarters within the 4.3%-5.9% range above baseline.
Parcel: Evolving Pricing Strategies Intensify Competition
E-commerce's backbone shows significant transformation:
- Pricing Shifts: The era of predictable annual rate increases with advance notice has ended. FedEx and UPS have implemented more frequent, sophisticated pricing adjustments amid soft demand.
- UPS Adjustments: Multiple 2025 changes include new zip-code zone adjustments, paper invoice fees, payment processing charges, and increased late payment penalties.
- Fuel Surcharge Dynamics: Despite 8.4% lower diesel prices, UPS ground fuel surcharges rose 15% and FedEx's 12% year-over-year.
- Q1 Performance: Express parcel pricing followed seasonal trends, with GRIs and fuel surcharges driving 5.2% quarterly cost increases per package.
- Market Competition: Challenging volume growth reflects carrier network optimization enabling cheaper ground service substitutions, plus new competition like USPS's 54-market priority next-day service.
- Q2 Outlook: Per-package rates may decline 0.3% quarterly to 3.1%, down 1.4% year-over-year.
Less-Than-Truckload (LTL): Resilient Pricing Amid Economic Headwinds
The SME-focused sector demonstrates notable stability:
- Pricing Strength: LTL rates remain robust despite economic challenges.
- Q1 Performance: Effective GRIs and 4% higher net fuel surcharges offset shorter hauls and lighter weights, driving 1.5% quarterly and 0.5% annual cost increases per shipment.
- Q2 Outlook: The per-pound rate index may reach 63.4%—slightly lower quarterly but 0.7% higher annually, marking six consecutive quarters of year-over-year growth.
Conclusion: Navigating Uncertainty for Sustainable Growth
The TD Cowen/AFS Freight Index clearly maps today's complex freight landscape. Amid tariffs, demand shifts, and economic uncertainty, businesses require deep market understanding to develop effective strategies. This index provides the data-driven insights needed to overcome challenges, seize opportunities, and achieve competitive success.
By monitoring key indicators and trends, companies can optimize transportation strategies, enhance efficiency, and drive profitable growth. More than a report, it's an essential tool for navigating the freight market maze and reaching sustainable success.