Tariffs and economic uncertainty impacting truckload rates, says freight index

AFS Logistics and TD Cowen have released the Q2 2025 edition of the TD Cowen/AFS Freight Index, showing continued pressure on truckload pricing, resilient less-than-truckload (LTL) rates and complex parcel pricing strategies by major carriers.

The index, which provides predictive pricing insights for truckload, LTL and parcel markets, highlights how economic uncertainty and evolving trade policies are tempering any freight market recovery.

“Tariffs have become the topic du jour in boardrooms and beyond, and combining those policy changes with a cloudy macroeconomic picture is a recipe for the uncertainty and caution that characterize current market sentiment,” said Andy Dyer, CEO of AFS Logistics.

Truckload pricing in Q1 2025 rose slightly due to early inventory pulls, natural disasters and capacity corrections. However, more regional shipments drove down the total cost per shipment to its lowest level in more than three years. The index projects truckload rates will see a modest quarter-over-quarter dip in Q2, marking the ninth straight quarter of suppressed rates.

LTL rates, meanwhile, continue to defy broader market softness. The cost per shipment rose 1.5 per cent quarter-over-quarter in Q1 and is forecast to remain elevated in Q2.

“Truckload typically feels the impact of macroeconomic forces and trade policy first, then LTL has more of a delayed reaction,” said Aaron LaGanke, vice-president, freight services at AFS. “For now, LTL carriers are effectively navigating a low-demand environment with a focus on profitable lanes, contractual relationships and reliable freight, rather than chasing volume with pricing concessions.”

Parcel carriers, including UPS and FedEx, have implemented a range of new fees and surcharges in a bid to bolster revenues despite weak volumes. UPS ground fuel surcharges jumped 15 per cent year-over-year in Q1, while FedEx’s increased 12 per cent—despite an 8.4 per cent drop in diesel prices.

“These latest changes introduce even more complexity for shippers to digest and negotiate,” said Mingshu Bates, chief analytics officer and president of parcel at AFS. “If they overlook any one of these subtle updates, they can find themselves subject to punitive provisions like a blanket payment processing fee that’s in effect a two per cent price hike.”

While the average discount in ground parcel rose slightly, the cost per package still hit a record high in Q1. Ground parcel rates are expected to dip slightly in Q2, but remain 2.6 per cent above 2024 levels.

Express parcel pricing grew in Q1, but volume remains soft amid rising competition from the U.S. Postal Service and regional carriers.

The TD Cowen/AFS Freight Index reflects data from more than $39 billion in annual transportation spend and uses machine learning to forecast quarterly rate changes against a 2018 baseline.