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Less-than-truckload rates hit a new high in the fourth quarter “as carriers flex[ed] pricing power despite limited demand,” a quarterly report from 3PL AFS Logistics and financial services firm TD Cowen said on Wednesday. Rates are expected to cool modestly in the seasonally weak first quarter.
The LTL rate-per-pound component of the TD Cowen/AFS Freight Index stood 67.9% above its January 2018 baseline during the fourth quarter. That was 100 basis points higher than the third quarter and 490 bps higher year over year.
The dataset is expected to dip 180 bps in the first quarter to 66.1%. That would still mark a 220-bp y/y increase and nine straight quarters of y/y growth.
“Even as demand has remained limited and mode optimization enables shippers to find savings, LTL carriers have resisted the urge to ‘buy’ freight volume via pricing concessions,” said Mich Fabriga, vice president of LTL pricing at AFS Logistics.
Manufacturing data remained underwater again in the fourth quarter. The Purchasing Managers’ Index registered a 47.9 reading in December, a 30-bp decline from November. (A reading above 50 signals expansion while one below 50 indicates contraction.) The index has flagged recessionary for 10 straight months and 36 of the past 38 months.
The new orders index — an indicator of future activity — remained contractionary at 47.7.
Cost per LTL shipment declined just 30 bps from the third quarter even with bigger declines in both weight per shipment (down 160 bps) and length of haul (down 260 bps). Fuel surcharges stepped 140 bps lower in the period.
“The fact that LTL cost per shipment has remained more than 40% above January 2018 levels since Q2 2022, even as weight per shipment has declined by 20% over the same interval, is a testament to carriers’ exceptional pricing discipline,” the report said.
The truckload data was more mixed. The report noted “tentative signs of recovery in late 2026” as capacity pressures (English-language proficiency requirements, non-domiciled CDL restrictions, and ELD and driver school crackdowns) “support higher rates but demand remains flat.”
The TL rate-per-mile component of the index increased 160 bps sequentially in the fourth quarter (up 240 bps y/y) to a level just 7.6% above the 2018 baseline. Cost inflation has greatly outpaced TL rate growth over that stretch, compressing carrier margins and forcing some to fail.
The index is expected to dip 20 bps in the first quarter, but at 7.4% above the baseline, it would be 120 bps higher y/y and a fifth consecutive quarterly increase (y/y).
Truckload linehaul cost per shipment fell 8.6% sequentially in the period with miles per shipment dropping 10%, “reflecting ongoing shipper network regionalization and mode optimization efforts.”
The report said costs and miles moving in lockstep “paint the picture of a freight market stabilizing under flat demand.”
“The common sentiment around the industry is that carriers who have weathered the rock-bottom rates of the past three years will be rewarded with a recovery in 2026,” said Aaron LaGanke, vice president of freight services at AFS. “But when exactly that shift will occur is anyone’s guess.”
The TL earnings season starts on Thursday when J.B. Hunt Transport Services (NASDAQ: JBHT) reports fourth-quarter results after the market closes. The LTL earnings season kicks off on Jan. 30 when ArcBest (NASDAQ: ARCB) reports numbers 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.
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