Article Summary
Fuel price shocks are driving freight rates to their highest levels in 15 quarters, with diesel prices up 51% and truckload rates reaching 16% above baseline in Q2 2026. Capacity constraints from regulatory enforcement and carrier exits, combined with spiking fuel costs, are expected to sustain elevated rates through Q3 and beyond.
- Q2 diesel prices surged 51% compared to January-February levels, while jet fuel jumped 90% year-over-year, directly inflating freight bills
- Truckload rates hit 16% above the January 2018 baseline in Q2, the highest level in 15 quarters, with Q3 projected to reach 17.7%
- Regulatory enforcement reduced the driver pool by 48,000 over the past year, creating significant capacity constraints that amplify rate pressure
- LTL fuel surcharges reached 60% above June 2025 levels, with even $4/gallon diesel projected to result in 24-24.5% surcharges
- Middle East conflicts pose continued threat to fuel prices and freight rates, with potential for even higher costs in Q3 and beyond
This quarter’s TD Cowen/AFS Freight Index, released by AFS Logistics and TD Cowen, shows the effects of oil price shocks rippling through shipping markets, with Q2 data showing rates actualized at higher-than-projected levels.
Forward-looking estimates for Q3 expect rates to hold steady at elevated levels, though renewed conflict in the Middle East and the associated impact on fuel prices could threaten even higher costs.
“With this edition of the freight index, the fuel numbers tell the story. In Q2, diesel prices rose about 51% compared to January and February levels, while jet fuel prices were up 90% compared to Q2 of last year,” says Andy Dyer, CEO, AFS Logistics. “Beyond the direct impact of higher freight bills paid by shippers, these price movements also have second-order effects that squeeze rates higher. Smaller truckload carriers working on tight margins may park trucks and wait for fuel prices to revert to more palatable levels before returning to operation, further restraining capacity amid a supply-side market correction.”
Key takeaways:
· Despite some encouraging signs, a demand-driven recovery is yet to materialize. Macroeconomic signs show a mixed outlook, with moderate gross domestic product growth but limited spending and resurgent inflation.
· But while demand signals remain tentative, the capacity contraction is fully underway. Heightened regulatory enforcement action has reduced the driver pool by more than 48,000 over the past year and together with continued carrier exits, is resulting in significantly tighter capacity.
· That supply-side pressure and spiking fuel costs powered truckload rates to their highest levels in 15 quarters, reaching 16% above the January 2018 baseline in Q2. That capacity crunch-driven momentum is expected to continue in Q3, with the truckload rate per mile index projected to reach 17.7%, a four-year high and 11% YoY increase.
· After one quarter of weight per shipment and cost per shipment moving in tandem in Q2, the two metrics once again de-coupled, with falling weight reflecting continued softness in industrial and manufacturing demand alongside ongoing modal shifts. But while longstanding carrier pricing discipline played a role in keeping rates elevated, significantly higher fuel prices pushed costs to new heights. The average LTL fuel surcharge in Q2 2026 surged to over 60% above the June 2025 level, driven by 51% higher diesel prices compared to the early 2026 average.
· The Q2 2026 rate per pound index was projected to reach a record high, but reached even greater heights than expected, primarily driven by the prolonged conflicts in the Middle East boosting average fuel cost per pound by 46% quarter-over-quarter (QoQ). Looking ahead to Q3, the LTL rate per pound index is expected to sustain historically elevated levels and reach a new high of 76.8% above the January 2018 baseline, up 0.2% QoQ and 5.9% YoY.
· Regional and last-mile carriers more than doubled their volumes from 2024-2025, according to Pitney Bowes data.
· If diesel falls to $4 per gallon, shippers will still pay a 24-24.5% fuel surcharge, compared to just 21% under last year’s tables. In Q2 2026, spiking diesel prices translated into average net fuel surcharge per package increasing 40% YoY.
· In Q2, discounting in express parcel took the opposite approach of ground. Elevated fuel surcharges, higher billed weight and more premium services proved a potent formula for elevated rates, with the express parcel rate per package index reaching a new high of 15.5% above the January 2018 baseline in Q2.
· Looking ahead, the cumulative effect of carrier changes to measurement rounding rules and additional handling surcharge policies will keep average billed weight elevated, and demand surcharges are expected to return toward the end of Q3, adding further upward pressure. The result is another record high, with Q3 expected to reach 15.8% above the January 2018 baseline — up 11.1% YoY.
