Logistics: Price Trends
Pricing Across the Transportation Modes
By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 11/1/2008
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@alertdata.com
Trucking
Falling prices for trucking are playing a key role in moderating freight costs now. For every $100 worth of product sold, the median U.S. manufacturing industry in our cost model of 457 industries spent 4 cents less on inbound freight in September than the prior month. Rates were especially soft for long-distance LTL service, down 3.2% from a month ago. Shippers also benefited from rate declines for long-distance TL services for both general freight, down 2.3%, and specialized freight, down 0.8%. Rates for local general freight services declined 2.1%. Despite this rash of price cuts, aggregate prices in the trucking industry ended Q3 9.7% higher than a year ago and will be up 10.3% in the final quarter.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -2.1 | 1.7 | 9.6 |
| Truckload | -2.3 | 3.2 | 6.7 |
| Less-than-truckload | -3.2 | -1.2 | 6.1 |
| Tanker & other specialized freight | -0.4 | 2.4 | 9.7 |
Air
Prices for flying cargo on scheduled domestic flights dipped 2.1% in September. That unfortunately did too little to correct for the previous month’s whopping 12% price jump. From the same period a year ago, the scheduled air freight price index was up 19.4% in the third quarter, on the heels of an 18.3% price hike in the second quarter. We forecast another 17.3% year-ago price increase in the final quarter of 2008. In the air courier sector, meanwhile, tags held steady from August to September. Price hikes from the previous two months, however, dictated a high-inflation quarterly route: in Q3 of 2008, domestic and international air courier prices were up a respective 21.1% and 21.6% from a year ago.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | -2.1 | 5.4 | 22.0 |
| Chartered air freight & passenger | -2.5 | na | na |
| Domestic air courier | 0.0 | 12.0 | 21.2 |
| International air courier | 0.0 | 11.7 | 21.7 |
Water
In September, hurricane Gustav helped push tags for inland waterways freight transportation, excluding towing services, up 6.4% from the previous month or up 23.1% from the same month a year ago. Another inflation shock also hit shippers via coastal and intercoastal towing services; tug boat companies reported prices up 5% from August or up 35.8% from September 2007. Deep sea freight transportation tags, meanwhile, increased 1.3% and 21.7% over the same time periods. For the water transportation sector in total, average prices were up 15.3% in the third quarter of 2008 compared to same period a year ago and are forecast to see another 14.7% year-ago price hike in the final quarter of this year.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | 1.3 | 16.8 | 21.7 |
| Coastal & intercoastal freight | 0.4 | 1.2 | 3.4 |
| Grt. Lks.-St. Lawrence Seaway | 0.2 | 4.1 | 15.4 |
| Inland water freight | 5.4 | 16.6 | 21.2 |
Rail
With a 1.7% September rate cut, rail companies cut tags for intermodal service for the third month in a row. These monthly price drops, however, were too meager on the heels of three months of ever higher price tags in the second quarter. As a result, in Q3 of 2008, intermodal rail rates registered a 2.5% price hike from the second quarter and a 19.2% increase from the third quarter of 2007. Adding to the inflation fever, average prices for carload rail service increased for the seventh consecutive month, up 0.7% in September. For the entire rail industry, prices in Q3 of 2008 were up 14.3% from the same quarter a year ago. We forecast another 12.4% year-ago price hike in last three months of 2008.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 0.4 | 7.2 | 13.7 |
| Intermodal | -1.7 | 5.2 | 16.8 |
| Carload | 0.7 | 7.6 | 13.6 |
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