LTL pricing index hits new high in Q4

Core Insights - Less-than-truckload (LTL) rates reached a new high in Q4, driven by carriers exercising pricing power despite limited demand [1] - A modest cooling of rates is anticipated in the seasonally weak first quarter [1] LTL Rate Analysis - The LTL rate-per-pound component of the TD Cowen/AFS Freight Index was 67.9% above the January 2018 baseline in Q4, marking a 100 basis point increase from Q3 and a 490 basis point increase year-over-year [2] - A projected dip of 180 basis points in the first quarter is expected, bringing the rate to 66.1%, which still represents a 220 basis point year-over-year increase and nine consecutive quarters of growth [2] - LTL carriers have maintained pricing discipline, resisting the temptation to lower prices to increase freight volume despite limited demand [3][6] Manufacturing and Economic Indicators - Manufacturing data indicated continued contraction, with the Purchasing Managers' Index at 47.9 in December, a 30 basis point decline from November, signaling recessionary conditions for 10 consecutive months [4] - The new orders index, a future activity indicator, remained contractionary at 47.7 [4] Cost and Pricing Trends - The cost per LTL shipment declined by only 30 basis points from Q3, despite larger declines in weight per shipment (down 160 basis points) and length of haul (down 260 basis points) [5] - Fuel surcharges decreased by 140 basis points during the same period [5] - The sustained high cost per shipment, over 40% above January 2018 levels since Q2 2022, reflects carriers' strong pricing discipline [6] Truckload Market Insights - The truckload (TL) market showed tentative signs of recovery in late 2026, with capacity pressures supporting higher rates, although demand remains flat [7] - The TL rate-per-mile component increased by 160 basis points sequentially in Q4, reaching a level 7.6% above the 2018 baseline, with cost inflation outpacing rate growth [7] - A slight dip of 20 basis points is expected in the first quarter, but the rate would still be 7.4% above the baseline, representing a 120 basis point year-over-year increase and the fifth consecutive quarterly increase [8]