Logistics: Price Trends
Pricing Across the Transportation Modes
-- Logistics Management, 5/1/2009
Trucking
Compared to a year ago, the trucking industry cut its average prices by 2% in the first quarter of 2009. The last time the industry presented a year-ago price drop was 1993. Long-distance truckload companies led the way with a 4.4% quarterly price decline. LTL carriers, meanwhile, managed to push through a 2.6% hike. Already burdened by excess capacity, the severity of the current recession will leave supply outstripping demand through most of 2009. This means trucking prices will fall in all four quarters of the current year, before stabilizing slowly in 2010. Our forecast now calls for average trucking prices to fall 7% in 2009 and gain only 0.1% in 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -1.5 | -7.3 | -4.3 |
| Truckload | -1.3 | -9.3 | -5.6 |
| Less-than-truckload | -1.5 | 0.5 | -0.5 |
| Tanker & other specialized freight | -1.8 | -6.1 | -3.6 |
Air
U.S. airlines dropped their average prices for flying cargo on scheduled flights by 4.9% in March on the heels of a 5.9% cut in February. Nonetheless, these prices still stood 5.5% higher in the first quarter of 2009 compared to the same period a year ago. High jet fuel surcharges allowed air cargo rates to soar in 2008. In the year ahead, recessionary winds will exert a downward draft on prices charged by airline companies and freight forwarders. Over the next five quarters, prices for flying cargo on scheduled flights will decline from the fuel-injected levels of the previous year. On an annual basis, prices will drop 5.8% in 2009 and possibly decline again by 0.3% in 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | -4.9 | -10.8 | -1.8 |
| Chartered air freight & passenger | -5.5 | NA | NA |
| Domestic air courier | 1.3 | -11.0 | -4.6 |
| International air courier | 1.1 | -13.3 | -4.5 |
Water
As more economists’ macroeconomic forecasts are revised downward and overseas markets drop into deeper recessions, we’ve been forced to revise water transportation price forecasts down too. Instead of a 2.7% price cut in 2009, we now predict water freight tags will decline 8% this year, followed by a 1.4% cut in 2010. The most recent Labor Department surveys of U.S.-owned barges and ships shows transaction prices were pummeled in March. Compared to March 2008, average prices for the deep-sea category fell 5% while coastal and intercoastal freight tags declined 2.6% and inland waterway service prices dropped 2.3%.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | 0.0 | -19.2 | -5.0 |
| Coastal & intercoastal freight | -0.7 | -1.9 | -2.6 |
| Grt. Lks.-St. Lawrence Seaway | 0.0 | 3.3 | 6.1 |
| Inland water freight | -13.7 | -19.0 | -2.3 |
Rail
Despite wielding oligopoly power, this recession has caused average prices for both intermodal rail and carload service to fall again in March 2009. That was the seventh consecutive month of price cuts. In the first quarter of 2009, intermodal tags declined 9% from the same period a year ago. Average carload prices dropped 3.9% at the same time. Perhaps rail industry executives are making price concessions as a strategy to entice business from trucking. Rail price trends, however, now appear askew, outside the norm of historic trends. So it is with some discomfort that we project rail prices will decline 9.4% in 2009 and increase 0.7% in 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | -1.2 | -10.9 | -5.7 |
| Intermodal | -1.9 | -16.8 | -12.0 |
| Carload | -1.2 | -10.5 | -5.2 |
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