Pricing Across the Transportation Modes
By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 5/1/2006
TRUCK
Average prices charged by U.S. trucking companies increased 0.5% from February to March 2006. That was the largest one-month price hike since October 2005, when prices increased 1.3%. The source for this March madness was the long-distance less-than-truckload carriers, which increased their prices an average of 0.6%. Meanwhile, prices charged by truckload carriers held steady, and those for specialized freight services inched up 0.1%. Compared to year-ago price levels, LTL led the pack with a 6.4% price gain. Tags for tanker and other specialized trucking services increased 5.4%, while TL prices were up a more modest 3.0%. With the first quarter of 2006 complete, we now are forecasting average prices for all types of trucking services to gain 4.9% in the second quarter, 4.5% in the third quarter, and 4.0% in the fourth quarter.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -0.5 | -0.6 | 2.6 |
| Truckload | -0.9 | 2.9 | 6.3 |
| Less-than-truckload | -1.9 | -0.1 | 4.9 |
| Tanker & other specialized freight | -0.5 | 2.3 | 5.3 |
AIR
After flying a turbulent, up-and-down route from 2002 to 2004, transaction prices in the domestic airline industry appear to be steadily ascending now. From March 2005 to March 2006, shippers paid 7.8% more to fly their cargo on scheduled flights and approximately 6.0% more to ship on chartered flights. At the same time, the air courier business has also been reaching new pricing heights. Domestic air courier prices increased 8.6%, while international air courier tags jumped a strong 16.2%. A strengthening worldwide economy is piloting this upward flight. With few signs of a slowdown, we are currently forecasting that prices on domestic airlines will grow at least 5.4% in 2006, but even that may underestimate the upward pressures on air cargo pricing.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | -2.5 | 2.4 | 5.4 |
| Chartered air freight & passenger | 0.2 | 1.5 | 4.9 |
| Domestic air courier | 0.0 | 5.2 | 7.6 |
| International air courier | -0.2 | 7.1 | 9.8 |
WATER
Deep-sea carriers shouldered the majority of the blame for the last big surge of inflation in 2003–2004. In the first quarter of 2004, for example, prices for deep-sea transportation jumped 11.3% from year-earlier levels. At the same time, prices for shipping on the Great Lakes increased just 0.7% and inland waterways pricing actually dropped 0.9%. What a difference two years makes—the situation has completely reversed! In the first quarter of 2006, deep-sea prices were up a mere 0.5% from year-ago price levels, but tags for shipping on the Great Lakes were up 5.7% and inland waterways pricing shot up 19.3%. Looking at our total water-transportation price index, the upward push from inland waterways will largely offset the decline in deep-sea pricing. Thus, after a 5.1% price hike in 2005, we expect a 4.0% gain in 2006.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | -1.5 | -1.1 | -0.4 |
| Coastal & intercoastal freight | -0.1 | 3.8 | 13.9 |
| Grt. Lks.-St. Lawrence Seaway | -1.5 | 1.8 | 4.9 |
| Inland water freight | 0.7 | 22.5 | 30.3 |
RAIL
Rail transportation companies wielded their pricing power again in March by hiking average transaction prices for bulk railcar shipments by 1.6%. That increase more than offset the previous two months of price declines, to leave carload rail prices standing 31.0% higher than they were five years ago. For the entire first quarter of 2006, prices for carload services were 11.3% higher than they were a year earlier. In contrast, intermodal service prices were 13.1% higher than they were in 2001, and in the first quarter of 2006 they were up 8.4% from a year ago. Looking at the year ahead, a continued focus on cost controls, more rationalizing of rail capacity, and another 8.1% price hike in 2006 means that shippers will remain under extreme pressure to sign favorable transportation contracts.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 0.1 | 6.1 | 12.7 |
| Intermodal (trailer or flatcar) | -4.2 | 2.6 | 9.7 |
| Carload | 0.7 | 6.7 | 13.3 |
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