Cowen Inc. and AFS Logistics LLC issue new Freight Index, with a forward-looking view

Earlier this month, New York-based investment firm Cowen Inc. and Shreveport, La.-based 3PL and freight audit and payment company AFS Logistics LLC announced they have partnered up to roll out a new offering, entitled the Cowen/AFS Freight Index.

The companies said that the objective of the quarterly Freight Index is to provide institutional clients of Cowen with predictive pricing tools for various sectors—including less-than-truckload (LTL), full truckload shipping (TL), and parcel shipping (separately focusing on express and ground).

The companies explained that the by leveraging AFS’s access to freight data across various modes, coupled with applying advanced analytics like machine learning algorithms, they have developed models that they said provide a complete picture of the data’s depth and richness. And they also highlighted how along with the large amount of historical data, they are evaluating and selecting current macro- and micro-economic factors, which are built into their historical models, which includes the most recent GRI (general rate increase) announcement from a major parcel carrier. What’s more, Cowen and AFS noted that the Cowen/AFS Freight Index “offers a unique and comprehensive review of both past performance and the forecasted outlook for the immediate future quarter.”

In an interview with LM, AFS Chief Executive Officer, Tom Nightingale explained that that the forward-looking nature of the report serves as a key differentiator of the report compared to others in the market.

“We are actually predicting where rates will go, not just where they have been,” he said. “We are also breaking down LTL, TL, and parcel (into two sub-categories) so it makes it [the Freight Index] unique in that regard.”

And from an AFS perspective, Nightingale said that this release, in a way, marks the emergence of AFS from 39 years of what he called stealth mode.

“We have been around for 39 years but so few people have heard of us,” he said. “We have $10 billion worth of freight audit payment data that we are now bringing to life. Our analytics team has done some amazing work, in partnership with Cowen, and have basically built out what we believe is the industry’s first forward-looking AI (artificial intelligence) and ML (machine learning)-freight index.  That allows us to get into some of the real depths of the data we have and turn that into information and not just data.

Cowen and AFS has been actively working on the Freight Index for the last six months, during with time they have been building out the models and ML components to it and then bench-testing it up against Cowen’s investor return database to help see correlations in between the indices and how they were tracking relative to individual companies within those verticals.

Nightingale added that with the Freight Index being published quarterly, Cowen and AFS plan to close out the prior quarter’s data and use that to “feed the machine” and make the learnings a little bit more robust each quarter, as things move along.  And he said it will typically be released at the beginning of the new quarter, predicting out the balance of thew quarter.

“Freight is a rapidly changing industry and the ability to track its performance has become a critical component of the investment process for our clients,” said Jason Seidl Cowen’s Senior Analyst for Airfreight & Surface Transportation, in a statement. “There is strong demand for tools to accurately monitor and predict sector trends. The Cowen/AFS Freight Index is designed to fill that void. Using applied machine learning, data science and the annual transportation spend at AFS since 2018 to give a strong picture of the overall market, the Freight Index currently forecasts, among other things, that we should see the TL rate market reach a new high in the fourth quarter of 2021, with LTL rates expected to grow at an even larger clip.”

The debut edition of the Cowen/AFS Freight Index issued the following takeaways:

• a dramatic annual 15.2% increase for the Composite Truckload Rate Per Mile Freight Index in the fourth quarter;
• a steady decrease in average weight per LTL shipment going back to March 2021;
• a previously rising express parcel per package and billed weight per package trending downward in the third quarter; and
• Ground Parcel Rate Per Package Freight Index will hit an All-Time High in Q2 2021, among others 

Click here to read the complete Cowen/AFS Freight Index.