TD Cowen/AFS Freight Index points to a muted peak season and mixed activity across TL, LTL, and parcel markets

考恩的新版本/ AFS运价指数,which was recently released by New York-based investment firm Cowen Inc. and Shreveport, La.-based 3PL and freight audit and payment company AFS Logistics LLC, highlighted mixed readings, as well as expectations, for truckload, less-than-truckload (LTL), and parcel activity, from the third quarter to the fourth quarter.

The index made its debut in October 2021. The companies said that the objective of the quarterly Freight Index is to provide institutional clients of Cowen with predictive pricing tools for various sectors—including less-than-truckload (LTL), full truckload shipping (TL), and parcel shipping (separately focusing on express and ground).

The companies explained that the by leveraging AFS’s access to freight data across various modes, coupled with applying advanced analytics like machine learning algorithms, they have developed models that they said provide a complete picture of the data’s depth and richness. And they also highlighted how along with the large amount of historical data, they are evaluating and selecting current macro- and micro-economic factors, which are built into their historical models, which includes the most recent GRI (general rate increase) announcement from a major parcel carrier. What’s more, Cowen and AFS noted that the Cowen/AFS Freight Index “offers a unique and comprehensive review of both past performance and the forecasted outlook for the immediate future quarter.”

“UPS-Teamsters negotiations and the Yellow collapse kept logistics managers on their toes this summer assessing risk and managing contingency plans,” says Tom Nightingale, CEO of AFS, in a statement. “Yet even as irregular shocks pressure certain transportation markets, we still see the effects of soft demand and the current macroeconomic climate empowering shippers to find relief.”

The Index issued the following takeaways across the modes it covers:

• third quarter LTL rates increased 2.2% annually, on the heels of Yellow closing its doors this summer, with two-thirds of that stemming from the increase in average linehaul charges, which was attributed to carriers showing pricing restraint ahead of Yellow’s departure and Yellow’s freight going from low-cost carrier Yellow to LTL carriers with higher average pricing. It added that third quarter carrier fuel surcharges were up almost 20% from the second quarter to the third quarter, with LTL rate per pound in the fourth quarter is pegged to be up for the second quarter in a row, up 59.3% over the January 2018 baseline, slightly ahead of the third quarter and down 3.2% annually;
• 第三季度利率首次看到一个包裹nual decline since 2019, driven by carriers using more aggressive discounting in order to secure volume in a softening market, coupled with the average discount per package rising one percentage point in the third quarter, for the largest increase on a year-to-date basis. Rates are expected to increase 1.5% in the fourth quarter, due to expectations for a muted Peak Season and UPS and FedEx both implementing demand surcharges. And the index added that the fourth quarter is expected to see ground parcel rates down annually, for the second straight quarter, falling 0.7% annually. For express parcel, third quarter rates fell 2.3% sequentially, due to higher discounting and falling billed weight, while average discount per package eked out an 0.8% increase, with average billed weight down 4%, more than offsetting a 14.6% increase in fuel surcharge and “power” the net decline in quarterly rates. In the fourth quarter, the index expects a 1.7% gain over the third quarter and a 2.5% annual gain, in line with growth rates over the last two years; and
• For truckload, the rate per mile index increased 4.3% over the January 2018 baseline, in the second quarter, to 4.4%, for the third quarter. Looking at the fourth quarter, the index expects freight activity to remain “relatively flat with modest, sequential improvement to 4.6% above the January 2018 baseline,” in line with expectations for a muted Peak Season. The index added that a quarterly increase in short-haul shipments played a key role in pushing overall truckload cost per shipment lower in the third quarter, which it said is likely the result of shippers’ efforts to optimize logistics networks and inventories