Rising fuel prices and stronger demand are driving less-than-truckload (LTL) rates to record highs, reported New York's Journal of Commerce. Shippers are shifting freight from truckload and parcel markets into LTL trailers as they manage costs.

The US LTL producer price index rose 1.8 percent in March from February, with a 7.2 percent annual gain. Fuel surcharges contributed to the increase, but rates have remained elevated since 2022 as carriers balance yields against reduced volumes, according to AFS Logistics.

The TD Cowen/AFS LTL Freight Index is expected to reach a four-year high of 68.4 percent in the second quarter. AFS chief executive Andy Dyer stated that truckload and parcel rate hikes are pushing more freight into the LTL sector, with shippers consolidating parcel moves and breaking down truckload shipments.

Regional carrier Pitt Ohio reported rising bill counts and revenue, while XPO and Saia also saw shipment gains in February. FedEx Freight's daily shipments fell 5.7 percent year on year in the quarter ending February 28, but the company expects midterm growth.

Manufacturing Purchasing Managers' Indexes from ISM and S&P Global show gradual expansion, with March readings above 50 percent signaling growth. Higher output and new orders are adding freight to LTL networks.

Analysts warn that inventory rebalancing, not new demand, may be driving volumes. The Iran war and closure of the Strait of Hormuz could tighten supply chains, raising risks of stock-outs.

Consultants say carriers should use technology, including artificial intelligence, to handle more freight without adding capacity. Profitability, rather than market share, is now the focus for major LTL providers.