Pricing Across the Transportation Modes
By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 6/1/2006
TRUCK
The U.S. trucking industry pushed through an average 0.7% price hike from March to April. That increase was possible thanks in large part to a 2.2% jump in prices charged by LTL general freight carriers. Truckload operators, in contrast, managed to push up prices just 0.6% over the same one-month period. Looking at tags in April 2006 compared to the same month a year earlier, prices are up 8% and 2.9% for LTL and TL, respectively. After 15 consecutive quarters of price hikes, the trucking industry cut tags by 0.4% in the first quarter of 2006. That’s likely a minor and temporary step back. The forecast now calls for average industry prices to grow 4.4% in 2006 followed by a 3% gain in 2007. Higher interest rates ahead should forestall more inflation surges.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -0.2 | 2.0 | 1.8 |
| Truckload | 0.6 | -1.0 | 2.9 |
| Less-than-truckload | 2.2 | 2.4 | 8.0 |
| Tanker & other specialized freight | 0.5 | 0.6 | 5.1 |
AIR
Just when you thought it was safe to fly again (from a budgetary perspective anyway), along came April with a 2.8% price increase for shipping freight on scheduled flights. That shocker left prices 9.9% higher than they were in April 2005. The picture looks even darker when you compare this to average price levels in 2001; in that scenario, prices for moving property by air were up 24.4%, while in contrast, prices for hauling freight over long distances were up just 14.7% for truckload service and 15.1% for intermodal service. With April tags unexpectedly high, the revised outlook shows airfreight prices on scheduled flights will be up 6% in 2006 followed by a 4.3% inflation rate in 2007. The only thing that’s likely to slow down these inflationary trends would be a serious slump in the global economy.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | 2.4 | 2.6 | 8.1 |
| Chartered air freight & passenger | 0.0 | 3.5 | 5.2 |
| Domestic air courier | -0.3 | 2.1 | 8.4 |
| International air courier | 0.0 | 7.0 | 16.2 |
WATER
Prices for waterborne cargo are still sailing in different directions. In April 2006, overall water transportation prices were up 3.1% from the same month a year ago. Despite 3.1% and 2.5% monthly price cuts in April and March, respectively, inland waterways transportation continued to set the pace with transaction prices up 14.1% from April 2005. Companies that move freight on the Great Lakes and St. Lawrence Seaway, meanwhile, indicated that their prices were up 6.3% over the same time period. Finally, deep-sea transportation prices were down 0.9%. Sifting through it all, our forecast calls for aggregate water transportation prices to increase 4.4% in 2006. Looking farther out, trend analysis suggests prices will be headed for at least another 3% jump in 2007.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | -0.1 | -0.8 | -0.9 |
| Coastal & intercoastal freight | 0.0 | 3.2 | 11.8 |
| Grt. Lks.-St. Lawrence Seaway | 1.7 | 3.9 | 6.3 |
| Inland water freight | -3.1 | 4.1 | 14.1 |
RAIL
Moving freight via rail isn’t getting any easier. In April, average prices for carload service increased 1.4% and prices for intermodal service rose 1.8%. The intermodal price hike was most disturbing because that 1.8% increase more than offset the previous three months of price declines and stagnation. Even if we assume the severe price hikes that plagued the rail industry at the end of 2005 were a temporary problem (which they were not), the rail industry appears headed for—at minimum—7% price increases in both 2006 and 2007. By the end of 2007, this means average rail transportation prices will be 40% higher than the average price levels that were seen in 2001.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 1.4 | 1.1 | 11.1 |
| Intermodal (trailer or flatcar) | 1.8 | -3.5 | 8.1 |
| Carload | 1.4 | 1.9 | 11.8 |
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