IN Brief:
- Truckload pricing has reached its highest level in four years.
- Fuel is driving higher less-than-truckload and parcel surcharges.
- Reduced carrier capacity is limiting the downward pressure previously created by excess equipment.
AFS Logistics expects US freight rates to remain under upward pressure as higher fuel costs and carrier capacity reductions affect truckload, less-than-truckload, and parcel services.
The latest TD Cowen/AFS Freight Index places truckload pricing at its highest level in four years. Diesel rose sharply during the second quarter, while the continued withdrawal of excess capacity reduced the number of trucks competing for available loads.
The truckload market has spent several years absorbing the fleet expansion that followed the pandemic freight peak. Weak rates subsequently pushed smaller operators from the market and encouraged larger carriers to reduce tractors, postpone replacement, or become more selective about loss-making lanes.
That adjustment is now colliding with a more expensive fuel environment. Diesel increased by approximately 51% against average levels recorded during January and February, altering the cost of every loaded and empty mile.
Fuel surcharges allow part of that increase to pass through to customers, although contract structures vary. Some agreements update weekly against a published index, while others use monthly revisions, fixed bands, route assumptions, or an all-inclusive rate.
Carriers remain exposed when the formula does not reflect actual fuel consumption or the amount of empty mileage required around a shipment. Shippers face the opposite risk when a surcharge rises quickly while underlying linehaul pricing remains disconnected from available capacity.
Less-than-truckload networks are experiencing similar pressure. LTL carriers consolidate freight from several customers through local terminals and scheduled linehaul routes, creating a cost structure that combines fuel with labour, terminal property, handling, equipment, and network density.
The separation of FedEx Freight and the expansion of Amazon’s freight services are also altering competition. Operators are reviewing pricing, terminal capacity, customer mix, and route density as the market reorganises around independent and newly expanding networks.
LTL pricing depends on more than the number of available trailers. A carrier requires balanced freight density between terminals to use labour and linehaul capacity effectively, and poorly matched lanes can remain expensive even when the wider market appears adequately supplied.
Parcel operators are increasing their recovery of fuel and handling costs through delivery-area, residential, peak, dimensional, weight, and network surcharges. The final invoice is consequently moving further from the published base tariff.
Amazon’s effort to compete more directly with established parcel operators, examined through its expanding shipping and pricing offer, gives some businesses another carrier option. Additional competition may restrain base rates, although every operator remains exposed to the same fuel and road environment.
Shippers now need to distinguish temporary price movement from structural cost. Spot truckload rates can rise quickly around produce seasons, weather, port peaks, or regional disruption before falling as equipment returns to the market.
Insurance, driver pay, terminal property, equipment, maintenance, and financing are less likely to reverse. Contract rates negotiated during a soft market may therefore reset at a higher baseline even if short-term spot pricing later moderates.
Network design can reduce part of the exposure through consolidated orders, more stable collection times, improved loading, reduced detention, and better balance between inbound and outbound movements. Freight that uses carrier capacity efficiently is less vulnerable to premium pricing.
Manufacturers can also reconsider mode and shipment size. Regular partial loads may move more economically through pooled distribution or consolidated truckload services, while some long-distance flows can transfer to intermodal rail where schedules, terminal access, and final drayage meet production requirements.
Inventory policy remains closely connected to transport cost. Businesses holding minimal stock often rely on expedited freight whenever demand shifts or a supplier misses a schedule, while additional inventory reduces premium movements at the expense of warehousing and working capital.
Accessorial charges require the same scrutiny as headline rates. Detention, re-delivery, liftgate, limited-access, appointment, dimensional, and address-correction fees can materially alter the cost after a carrier has been selected.
Data quality affects each calculation. Incorrect weights, dimensions, freight classes, addresses, or delivery requirements produce invoice adjustments and disputes, while inconsistent shipment descriptions prevent accurate comparison between carriers and service options.
The latest index suggests that the period of abundant and heavily discounted freight capacity is ending. Carriers still require volume, although fewer are prepared to accept work that fails to cover fuel, equipment, labour, and network costs.
US transport budgets are therefore absorbing inflation across several modes simultaneously. Contract review, consolidation, accurate shipment data, and better loading practices can remove avoidable expense, but the broader increase in fuel and capacity pressure is already reaching freight invoices.
