The new edition of the Cowen/AFS Freight Index, 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 how rising fuel prices are having a significant impact on both parcel and LTL (Less-than-Truckload) rates, whereas things are somewhat lessening on the truckload side.
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.”
In a previous interview with LM, AFS Chief Executive Officer, Tom Nightingale explained that that the forward-looking nature of the report serves as a key differentiator of the report compared to others in the market.
“We are actually predicting where rates will go, not just where they have been,” he said. “We are also breaking down LTL, TL, and parcel (into two sub-categories) so it makes it [the Freight Index] unique in that regard.”
The Index observed that dramatically higher fuel surcharges represent what it called the accelerated growth in LTL and parcel costs, for the second quarter of 2022, with truck driver shortages and labor costs continuing to support truckload growth, despite a softening in forecasted demand.
The Index issued the following takeaways across the modes it covers:
Cowen analyst Jason Seidl observed in a research note that this edition of the Index suggests a plateau in TL rate per mile, while LTL rate per pound is expected to reach a new record.
“A plateau of TL rates keep us wary of rates beyond 2H22 as the demand outlook remains uncertain,” he wrote.