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Understanding the Freight Market in Q1 2026

In the first quarter of 2026, the transportation landscape continues to evolve under the influence of large carriers, as demonstrated in the latest TD Cowen/AFS Freight Index. The data indicates that prolonged low demand has created an environment favorable for truckload carriers who possess the resilience to maintain lower profit margins. In contrast, less-than-truckload (LTL) and parcel carriers with significant market footprints have been able to exercise their pricing power successfully.

Signs of Recovery in Truckload Freight

The truckload sector, despite being fragile, shows early signs of recovery. Factors such as the exit of smaller carriers, industry consolidation, and stricter regulations have notably impacted the available capacity in this segment. As of Q4 2025, truckload rates were recorded at 7.6% above the January 2018 baseline—marking the first time this figure surpassed 7% since Q1 2023.

AFS Logistics' Vice President of Freight Services, Aaron LaGanke, emphasizes that those carriers who endured the challenging low-rate environment over the past three years are poised for a potential recovery in 2026. Increasing rejection rates above 10% in December and modest growth in spot market rates compared to contract rates hint at this forthcoming shift.

However, a significant demand-side catalyst that could facilitate a robust recovery is still absent. The ATA Truck Tonnage Index reported a mere 0.2% rise in November 2025, following larger declines in previous months, further illustrating the subdued demand.

The Strength of LTL Carriers

On the other hand, the LTL sector has demonstrated remarkable pricing strength amidst the challenge of limited demand. LTL pricing has consistently remained over 40% higher than pre-2018 levels, indicating strong discipline among carriers even as weight per shipment decreased. Despite ongoing economic pressures, particularly in U.S. manufacturing, carriers have maintained a keen focus on operational efficiency and revenue management, sustaining their profit margins. In Q4 2025, the LTL rate per pound index set a record high, landing at 67.9% above January 2018 levels.

Vice President of LTL Pricing at AFS, Mich Fabriga, notes that LTL carriers have adeptly avoided the temptation to increase freight volumes through price reduction, instead holding firm on rates, a stance that shippers must heed to effectively manage their freight expenses, particularly as market conditions evolve later in 2026.

Rising Costs in the Parcel Sector

The parcel segment has also seen record-high rates, particularly during the peak season of Q4 2025. Several factors contributed to this surge, including an uptick in residential shipments, which led to increased residential delivery surcharges. There has also been the introduction of broader demand surcharges that apply across the board, diverging from more targeted cost drivers adopted in the past.

In terms of metrics, the ground parcel rate per package index registered at 34.1% above the January 2018 baseline in Q4 2025, with projections suggesting an increase to 38.9% as the new year commences. These advanced pricing actions from carriers reflect a challenging but steadily evolving landscape for shippers looking to navigate freight spending and logistics efficiently.

Express parcel rates have similarly risen, attributed to various upward pressures including increased residential deliveries and enforced billing weights for additional handling packages. Forecasts indicate that express rates will reach 7.6% above the January 2018 baseline in Q1 2026.

As AFS’s Chief Analytics Officer, Mingshu Bates, points out, even though high rates may not favor shippers, there remains the potential for negotiation under certain circumstances which savvy shippers should explore to leverage efficiencies in freight management.

Conclusion

The Q1 2026 release of the TD Cowen/AFS Freight Index underscores the complexities of an evolving freight market. While truckload segments work through recovery dynamics, LTL carriers assert their pricing discipline effectively, and the parcel sector prepares for further rate adjustments. Understanding these market behaviors is crucial for stakeholders aiming to optimize their shipping strategies amidst fluctuating economic conditions.