LTL rates in the fourth quarter will eclipse 80% above the January 2018 baseline for the first time on record, according to the TD Cowen/AFS Freight Index, which also projects the highest truckload rates since Q1 2022 and record ground and express parcel costs for holiday shippers. The forecast, published by AFS Logistics and TD Cowen, attributes the surge to a structurally higher-cost transportation environment, entrenched fuel prices, capacity constraints and peak-related fees.

The index combines a market snapshot with predictive pricing for truckload, LTL and parcel transportation, giving shippers and forwarders a forward view of what the peak season will cost them. For the parcel sector, the report warns conditions are ripe for a "perfect storm for a pricey peak season," with Q4 projections cementing 2026 as the most expensive parcel shipping year on record.

What is driving the cost spiral?

Fuel sits at the center of the forecast. AFS Logistics CEO Andy Dyer said the elevated costs will persist regardless of what happens to crude. "We expect fuel to drive elevated transportation costs for the foreseeable future. Inventories are low and refineries are at capacity, so even if crude oil prices drop in the coming months, diesel and jet fuel supplies must still catch up before prices recede," Dyer said.

He pointed to capacity as the second structural force. "The holiday rush always places a seasonal premium on parcel capacity, while the continued ascent of truckload rates is the result of steady demand chasing a shrinking pool of trucks," Dyer said.

In practice, that means a truckload shipper faces the strongest carrier pricing power in more than four years — even though the report notes demand signals remain limited. For LTL shippers, the mechanics differ: fuel surcharges in that segment closely mirror diesel price trends, so the combination of sky-high fuel costs and carrier pricing power could send rates sharply higher.

Why won't parcel surcharges fall with fuel prices?

The parcel story diverges from LTL because carriers have engineered their surcharge tables to detach from the underlying fuel market. Since 2021, carriers have frequently reindexed surcharge tables — not only to capture additional revenue as fuel prices rise, but to keep surcharges high even as actual fuel prices fall.

Mingshu Bates, Chief Analytics Officer and President of Parcel at AFS Logistics, said the surcharge has evolved beyond a cost pass-through. "While diesel and jet fuel are major costs for ground and express parcel, the fuel surcharge has become a revenue lever for carriers in addition to a pass-through mechanism for covering the cost of doing business," Bates said. "Even if crude oil normalizes and fuel prices recede, the effective fuel surcharge will not show a material decrease."

The commercial consequence for shippers is direct: negotiated rate concessions will be partially offset by surcharge tables that ratchet upward and stay there. The report describes the result as the product of years of carrier pricing changes designed to maximize revenue across a broad range of market conditions.

What should shippers do for peak season?

Bates framed the peak as a year-long balancing exercise rather than a fourth-quarter scramble. "For shippers, peak season involves a year-long tight-rope act of balancing volume across carriers to maintain access to capacity when orders really need to move and to limit the impact of demand surcharges that incrementally penalize volume that exceeds baselines established earlier in the year," she said.

She also flagged a structural shift in carrier mix. "The holiday peak also tends to accelerate the trend of alternative carriers continuing to gain share from the large incumbents, as shippers diversify to shield themselves from capacity risk and surcharge impact," Bates said.

For carriers, that diversification pressure cuts at incumbent share precisely when peak volumes — and peak pricing — are at their richest. For forwarders and 3PLs, the index implies margin pressure unless surcharge exposure is modeled into quotes now rather than after the fourth quarter begins.

The report's trajectory is unambiguous: with fuel structurally high, truck capacity shrinking and surcharge tables reindexed upward, Q4 will test shipper budgets across all three surface modes, and parcel shippers in particular should expect 2026 to stand as the most expensive year on record well before the peak ends.

By Elena Vasquez