Recent Price Trends in Transportation Services
Staff -- Logistics Management, 5/1/2002
Trucking
The trucking industry appears to be bucking the trend established over the past eight years. In 2002's first quarter, U.S. trucking and courier companies reported that they had raised their rates by just 0.6% on average from the same quarter a year ago. From 1994 to 2002, average rates for trucking and land-based courier services rarely grew by less than 2.0%. Indeed, average rates jumped 4.6% in the first quarter of 2001 and 3.0% in the first quarter of 2000. We think rate hikes will continue to be only minimal through the second and third quarters of 2002 before returning to a more typical 2.0% inflationary rate.
Trucking
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Less-than-truckload | +0.1 | -0.4 | +2.7 |
| Truckload | -0.1 | -1.8 | -0.9 |
| General freight—local | -0.4 | +0.5 | +0.4 |
Water
Rates in the water transportation business are still sinking. In March 2002, average rates dropped 0.6%, which was the sixth consecutive month of decline. But because carriers pushed through such large rate hikes in 2000 and 2001, average rates in the first quarter of 2002 remained 2.0% above year-ago levels. That won't last long, however. We expect rates in the water transport industry to rise 1.9% above year-ago levels in the second quarter and fall 0.5% in the third. When the books close on 2002, we expect the industry will post a 1.3% annual rate hike.
Water
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Inbound liner | -1.1 | -12.4 | +6.3 |
| Outbound liner | -0.9 | -1.0 | +4.3 |
| Domestic deep sea | +0.2 | -0.3 | +2.7 |
| Grt. Lks.-St. Lawrence | 0.0 | -0.9 | -1.2 |
| Mississippi River | -2.0 | -7.2 | -8.0 |
Rail
Linehaul operators reduced rates by 0.3% between February and March 2002. But compared to a year ago, the rail freight industry saw a 2.2% rate gain. Intermodal operators, however, lagged behind; average intermodal rates rose a meager 0.1% from year-ago levels. Shippers of transportation equipment and lumber faced the biggest inflationary challenge. From year-ago levels, the cost to haul cars over the rails increased by 14.3% and lumber products by 7.9%. Using trend analysis, we forecast that rail industry rates will rise 1.7% in 2002.
Rail
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Coal/Petroleum | +0.1 | +0.1 | +0.2 |
| Chemicals | -1.4 | +2.3 | +2.5 |
| Farm products | 0.0 | -0.4 | +0.2 |
| Motor vehicles | -1.9 | +1.6 | +14.3 |
| Metallic ores | 0.0 | -1.7 | -0.5 |
Air
According to surveys of U.S.-based air carriers conducted by the U.S. Department of Labor, average rates for shipping cargo via scheduled airline flights soared 35.8% between February and March 2002. Compared to a year earlier, rates are up 44.3%. What gives? Analysts at the Bureau of Labor Statistics say these figures are not errors. Rather, the numbers likely reflect both seasonal spring/summer rate hikes and an increase in security costs. Because our forecasting model did not anticipate this rate jump, we have revised our domestic aircargo forecast; it now calls for average rates to rise 4.0% in 2002 and 3.0% in 2003.
Air
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air cargo (property) | +35.8 | +42.8 | +44.3 |
| Domestic air courier | +0.2 | +0.3 | +0.3 |
| International air courier | +0.3 | +2.7 | +4.2 |
Carrier Costs and Demands Affecting Transportation Service Prices
Wages
Final numbers for 2001 show that transportation service providers faced relatively stiff wage hikes. Hardest hit was the water transportation business, where workers collected a 5.0% wage hike, bringing their average hourly wage to $22.93. The first indications from 2002 suggest wage inflation won't be as big an issue in the months ahead. In the first quarter of 2002, average hourly earnings in the water transportation business were up just 1.6% from the final quarter of 2001.
Security Costs
Though the evidence has been largely anecdotal to date, recent data suggest that tightened security measures have indeed pushed up global shipping costs, particularly air transport rates. For example, domestic aircargo carriers registered a 44.3% rate hike between March 2001 and March 2002, and the fees that airports charge aircargo carriers increased 8.8%. International surcharges have been the stiffest: International air courier service saw a 4.2% rate hike, while domestic courier rates rose a meager 0.3%.
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