LTL price index reaches record level in the fourth quarter

LTL Rates Reach Record Levels Despite Weak Demand

In the final quarter of the year, less-than-truckload (LTL) shipping rates climbed to unprecedented heights, according to a recent analysis by AFS Logistics and TD Cowen. This surge occurred even as overall shipping demand remained subdued, with carriers maintaining strong pricing leverage. However, a slight decrease in rates is anticipated during the typically slower first quarter.

During Q4, the LTL rate-per-pound in the TD Cowen/AFS Freight Index was 67.9% higher than its baseline from January 2018. This represented a 1% increase over the previous quarter and a 4.9% rise compared to the same period last year.

Looking ahead, the index is projected to drop by 1.8% in the first quarter, settling at 66.1%. Despite this dip, the rate would still be 2.2% higher year-over-year, marking the ninth consecutive quarter of annual growth.

Mich Fabriga, who oversees LTL pricing at AFS Logistics, noted that, “Even though demand has been soft and shippers are optimizing modes to cut costs, LTL carriers have largely avoided lowering prices to attract more freight.”

Manufacturing Sector Remains in Contraction

Manufacturing activity continued to struggle in the fourth quarter. The Purchasing Managers’ Index (PMI) registered 47.9 in December, down 0.3 points from November. (A PMI above 50 signals growth, while below 50 indicates contraction.) The index has now indicated recessionary conditions for 10 consecutive months and in 36 of the last 38 months.

The new orders component, which signals future manufacturing activity, also remained in contraction territory at 47.7.

Although the cost per LTL shipment fell by just 0.3% from the previous quarter, there were larger declines in both average shipment weight (down 1.6%) and haul length (down 2.6%). Fuel surcharges also dropped by 1.4% during the quarter.

The report highlighted that, “Since the second quarter of 2022, LTL shipment costs have consistently remained over 40% higher than January 2018 levels, even as average shipment weight has dropped by 20%. This demonstrates the carriers’ strong pricing discipline.”

Truckload Market Shows Early Signs of Improvement

Trends in the truckload (TL) sector were more varied. The report pointed to “early indications of a rebound in late 2026,” as factors such as stricter language requirements, new rules for non-resident CDL holders, and increased oversight of driver schools are expected to limit capacity and support higher rates, even as demand remains steady.

In the fourth quarter, the TL rate-per-mile index rose by 1.6% from the previous quarter (and 2.4% year-over-year), reaching a level 7.6% above the 2018 baseline. A slight decrease of 0.2% is forecast for the first quarter, but the index would still stand 7.4% above the baseline—up 1.2% year-over-year and marking five straight quarters of annual gains.

Truckload linehaul costs per shipment dropped 8.6% sequentially, with miles per shipment falling 10%. This reflects ongoing efforts by shippers to regionalize their networks and optimize transportation modes.

Freight Market Stabilizing Amid Flat Demand

The report observed that costs and mileage are moving in tandem, suggesting the freight market is stabilizing despite lackluster demand.

Aaron LaGanke, vice president of freight services at AFS, commented, “Many in the industry believe that carriers who have endured the low rates of recent years will benefit from a recovery in 2026. However, the exact timing of this turnaround remains uncertain.”

The TL earnings season begins Thursday, with J.B. Hunt Transport Services (NASDAQ: JBHT) set to release its fourth-quarter results after the market closes. The LTL earnings season starts on January 30, when ArcBest (NASDAQ: ARCB) reports before the market opens.

About AFS Logistics

AFS Logistics is a third-party logistics provider specializing in audit and cost management, managed transportation, and freight brokerage. The company manages over $39 billion in annual freight expenditures.