Price Trends
Pricing Across the Transportation Modes
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@alertdata.com -- Logistics Management, 2/1/2009
Trucking
The economic recession drove average TL prices down 3.4% and LTL down 2% in December. In Q4 of 2008, average prices reported by the entire trucking industry declined an unprecedented 4.2% from the previous quarter. These price data from U.S. Labor Department surveys include fuel surcharges, so part of what we’re seeing reflects big drops in fuel costs. More downward revisions to our truck forecast indicate the industry will cut prices again by 4.1% in Q1 of 2009, followed by two more quarters of weaker price declines before stabilizing at the end of 2009. The trucking industry’s annual inflation rate registered 6.4% in 2008. We now expect average trucking tags to fall more steeply in 2009, down 6.2%.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -3.1 | -10.4 | -1.9 |
| Truckload | -3.4 | -7.7 | -1.7 |
| Less-than-truckload | -2.0 | -9.4 | -3.3 |
| Tanker & other specialized freight | -1.2 | -4.0 | 4.7 |
Air
Air freight price data from Labor Department surveys finally conceded to the recession. Average prices for shipping freight on scheduled flights and for shipping on chartered unscheduled flights fell in December by 3.1% and 4.1%, respectively. Air courier prices plummeted by over 10% from November to December. Due to lack of historical data for chartered flights, our forecast for air freight prices is limited to scheduled flights. Looking at this, we see that average prices for airfreight charged by U.S.-owned airlines soared by a fuel-surcharged 17.9% in 2008. We are still forecasting a 1.8% annual price cut in 2009. Next month when we will add analysis for 2010, the forecast for 2009 will likely be revised even farther down.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | -3.1 | -1.6 | 13.2 |
| Chartered air freight & passenger | -4.1 | N/A | N/A |
| Domestic air courier | -10.4 | -13.2 | 1.1 |
| International air courier | -10.1 | -12.7 | 2.1 |
Water
The U.S. water transportation price index fell 2.4% again in December, mirroring the 2.4% drop registered in November. For the entire fourth quarter of 2008, however, prices were down only 0.1% from Q3 and still stood 13.7% higher than prices set one year ago in the Q4 of 2007. These data are transaction prices reported by U.S. carriers, which means the 2008 rate collapse in international containership and bulk ocean tankers do not show up here. Nonetheless, the worldwide recession is having an effect on our water transportation price outlook. We now forecast U.S-based waterborne freight carriers will cut average prices 2% in 2009, following 2008’s 12.3% price hike. Like airfreight, don’t be surprised by more forecast revisions next month after we add the 2010 outlook.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | 0.0 | 3.0 | 18.9 |
| Coastal & intercoastal freight | -4.8 | -2.3 | -0.2 |
| Grt. Lks.-St. Lawrence Seaway | -0.9 | -2.1 | 7.2 |
| Inland water freight | -3.8 | -6.5 | 10.0 |
Rail
With more severe price cuts reported in December 2008, weakness in line-haul railroads has accelerated our recession-driven forecast revisions. All told, in the final quarter of 2008, intermodal rail prices plummeted 8.6% and carload tags fell 2.7%. For the rail industry as a whole, average prices were down 3.3% in the fourth quarter and ended 2008 with an 11.8% annual price increase. Last month, we had forecast rail industry prices would fall 2% in 2009. Now we have drastically cut that number and are forecasting rail industry prices to drop 4.5% in 2009. This outlook is predicated on a more severe recession scenario, which is also reflected in downward revisions to our trucking industry price forecasts.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | -2.5 | -4.9 | 4.5 |
| Intermodal | -4.0 | -13.5 | -2.0 |
| Carload | -2.4 | -3.9 | 5.3 |
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