Pricing Across the Transportation Modes: Price Trends
Pricing Across the Transportation Modes
Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 1/1/2009
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@alertdata.com
Trucking
In the largest one-month drop on record, prices charged by trucking companies in November plunged 2.7%. TL companies reported their prices for primary services fell 2.7% and ancillary services plummeted 11.2%. LTL companies also cut their price tags by 3.2% for primary services. Now we are calling for prices to fall more steeply still, down 3.6% in the final quarter of 2008 and 2.8% in first quarter of 2009. With consensus forecasts calling for a deeper, longer recession, we expect average trucking prices to fall 3.2% in 2009, ending the year back at price levels last seen in the first quarter of 2008. When demand grows again—after 2008 bankruptcies cut supply—payback will be swift in 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | -3.8 | -6.7 | 3.7 |
| Truckload | -2.7 | -3.8 | 2.5 |
| Less-than-truckload | -3.2 | -8.4 | -1.1 |
| Tanker & other specialized freight | -1.4 | -2.3 | 6.2 |
Air
Looking at airfreight prices on scheduled U.S. airlines only, transaction prices bucked the trend in November by increasing 0.8%. That number hid two different trends, however, as prices for flying mail fell 4.7% and prices for flying freight increased 1%. We don't expect further price increases to make much headway in the near term outlook, though our forecast takeoff point is now higher than we had expected. After an 18% annual price increase in 2008, our forecast for a 1.2% annual price cut in 2009 may still be much too tentative. More data on chartered airfreight prices is being released now and that may help us tune our understanding of price trends in the future.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | 0.8 | 1.6 | 23.2 |
| Chartered air freight & passenger | 0.0 | N/A | N/A |
| Domestic air courier | 1.2 | 0.3 | 13.8 |
| International air courier | 1.1 | 0.5 | 14.5 |
Water
The recessionary tide has begun to swamp the water transportation market now too. According to Labor Department surveys of U.S-based waterborne freight carriers, average prices in this industry fell 2.4% from October to November. Shipping on inland waterways led the way with a 9.1% price cut while deep sea freight transport prices were cut 3.3%. Our forecast for all water transport services calls for average prices to fall 2% in the first quarter of 2009. We're forecasting these U.S. prices will inch up slowly through the rest of the year. When new forecasts on import/export volumes are released, don't be surprised to see more downward revisions to water transport prices.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | -3.3 | 4.9 | 18.9 |
| Coastal & intercoastal freight | 2.4 | 4.1 | 4.9 |
| Grt. Lks.-St. Lawrence Seaway | -1.7 | 0.4 | 11.2 |
| Inland water freight | -9.1 | 4.2 | 13.0 |
Rail
Intermodal rail prices plunged 6% in November. That was the largest one-month price drop since October 2004. In 2004, however, the trend did not persist. This time, we've seen intermodal tags decline for four consecutive months. In the carload market, prices have fallen for two months, down 1.2% in November and 1.6% in October. Like the rest of the transportation market, rail industry tags will fall in the first quarter of 2009. We saw a cyclical downturn in rail industry prices in 2006–2007 and the 2009 price bust will mirror that one. Only this time the rate of price escalation will fall more steeply and will end in negative territory, down 2% by the end of 2009.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | -1.7 | -0.7 | 8.2 |
| Intermodal | -6.0 | -9.1 | 4.5 |
| Carload | -1.2 | 0.4 | 8.9 |
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