In today's rapidly evolving global freight market, access to accurate data and forward-looking insights has become essential for industry participants. The TD Cowen/AFS Freight Index, a collaborative effort between TD Cowen Inc. and AFS Logistics LLC, serves as a beacon of clarity in this complex and challenging landscape. This quarterly report not only provides comprehensive analysis of past performance but also offers precise forecasts of future trends, delivering valuable decision-making tools for freight companies, investors, and industry observers.
Strategic Partnership: Financial Expertise Meets Logistics Mastery
TD Cowen Inc. brings its formidable financial expertise to this collaboration. As a leading investment bank, the firm delivers exceptional financial services worldwide through deep industry knowledge, analytical rigor, and extensive business networks. Its achievements span capital markets, investment banking, research, and trading, all guided by a client-first philosophy focused on creating long-term value.
AFS Logistics LLC complements this financial perspective with operational excellence. As a prominent third-party logistics (3PL) and freight audit payment provider, AFS combines industry experience with advanced technological platforms to help clients optimize freight management processes, reduce transportation costs, and enhance operational efficiency.
The TD Cowen/AFS Freight Index: A Comprehensive Market Barometer
Launched in October 2021, the TD Cowen/AFS Freight Index provides institutional clients with a robust analytical tool covering key segments including less-than-truckload (LTL), truckload (TL), and parcel shipping (divided into express and ground services). The index integrates AFS Logistics' extensive freight data across transportation modes with advanced analytical techniques like machine learning to deliver comprehensive market insights.
The model incorporates both historical data and current macroeconomic and microeconomic factors, including recently announced general rate increases (GRIs) from major parcel carriers. This dual perspective enables unique retrospective analysis and forward-looking projections that distinguish the index from conventional market reports.
Q1 2025 Market Overview: Navigating Challenges and Opportunities
The Q1 2025 report reveals a freight market under pressure from weak demand, excess capacity, and complex pricing dynamics, yet still presenting opportunities for strategic operators. AFS CEO Andy Dyer notes: "While macroeconomic indicators show some positive signs for carriers, the forces shaping the 2024 freight market will persist through the coming quarter. Neither demand-side stimulus nor sufficient supply-side adjustments have emerged to fundamentally alter current market conditions."
Truckload: Signs of Stabilization Emerge
The truckload sector shows tentative signs of equilibrium despite ongoing challenges. Spot rate increases and rising tender rejection rates suggest carriers are becoming more selective, though contract rates remain depressed amid persistent overcapacity. The per-mile rate index is projected to hold steady at 5.1% above the January 2018 baseline - unchanged from the previous quarter and up just 0.2% year-over-year.
Key truckload challenges include:
- Persistent demand weakness from slowing economic growth
- Oversupply of capacity following pandemic-era expansion
- Volatile fuel costs impacting profitability
- Ongoing driver shortages elevating labor costs
Strategic opportunities center on:
- Adoption of autonomous and IoT technologies
- Development of sustainable transportation solutions
- Customized service offerings for diverse client needs
Parcel: The Pricing Strategy Tightrope
Parcel carriers demonstrate sophisticated pricing discipline, with demand surcharges increasing 16.4% quarter-over-quarter in Q4 2024. Fuel surcharge adjustments have proven particularly effective - while diesel prices fell 4.6%, ground parcel net fuel costs actually rose 4.7% through strategic fee table modifications.
However, underlying market weakness persists. The express parcel per-package rate index stands just 0.5% above baseline, with Q1 2025 projections showing a 4.1% seasonal increase that nonetheless represents a year-over-year decline due to aggressive discounting. Ground parcel shows stronger performance at 24.4% above baseline, though still below peak levels.
LTL: Pricing Discipline Under Pressure
The LTL market maintains relatively stable rates, though signs of eroding pricing discipline are emerging. Following Yellow Freight's bankruptcy-driven capacity reduction, carriers successfully maintained elevated rates throughout 2023. However, Q4 2024 saw per-shipment costs decline 1.3% against just a 0.3% drop in shipment weight, while fuel surcharges fell more steeply than diesel price declines would suggest.
The Q1 2025 per-pound rate index projection of 62.4% represents the fifth consecutive quarter of annual growth, though the slowing pace (+0.4% year-over-year) indicates mounting pricing pressures that carriers must carefully monitor.
Strategic Value of the Freight Index
The TD Cowen/AFS Freight Index delivers actionable intelligence that enables market participants to:
- Track evolving market trends and pricing dynamics
- Make data-driven operational and investment decisions
- Optimize network efficiency and cost structures
- Enhance profitability through strategic pricing
- Maintain competitive positioning in shifting markets
Industry Transformation Ahead
The freight sector stands at an inflection point, with multiple forces driving transformation:
- Technology: Autonomous vehicles, IoT, and blockchain promise efficiency gains
- Globalization: Evolving trade patterns create new demand dynamics
- Sustainability: Environmental priorities are reshaping transportation models
Through their collaborative index and combined expertise, TD Cowen and AFS Logistics provide the market clarity needed to navigate this period of change successfully. Their analytical framework offers freight industry participants the insights required to adapt strategies, optimize operations, and position for long-term success in an increasingly complex logistics environment.