Transportation Price Trends
Pricing Across the Transportation Modes
Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 7/1/2009
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@alertdata.com
Trucking
Local trucking companies that haul specialized freight (excluding household movers) cut their transaction prices by a startling 5.4% from April to May. Pushed by that sharp drop, the overall trucking industry reports prices in May fell 0.2% from a month ago and 6.1% from May 2008. Long-distance rigs carrying general freight haven't been immune from the deflation virus. From year-ago price levels, TL tags were down 8.7% and LTL were down 4.2%. Our aggregate trucking forecast now shows prices down 5.6% in 2009 and down again 0.4% in 2010. As U.S. consumers continue austerity measures, shippers with clout will enjoy great negotiation power with truckers though at least the first quarter of 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | 1.7 | -1.1 | -5.9 |
| Truckload | 0.5 | -4.5 | -8.7 |
| Less-than-truckload | 0.3 | 3.9 | -4.2 |
| Tanker & other specialized freight | -1.9 | -1.9 | -4.2 |
Air
According to surveys of U.S.-owned airline companies, May 2009 brought another round of price cuts. Shippers flying cargo in the belly of scheduled airline flights or on chartered planes saw average transaction prices drop by 1.7% and 4.6%, respectively, from a month ago. That 1.7% price cut for airfreight on scheduled flights was the eighth decline in nine months and left price tags sitting 8.8% below year-ago levels. Our forecast shows these prices continuing to decline through Q4 of 2009, albeit more slowly now compared to the sharp cuts seen at the end of 2008 and early 2009. The forecast calls for a 6.9% price drop in 2009 and a meager 0.1% gain in 2010.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | -1.7 | -9.2 | -8.8 |
| Chartered air freight & passenger | -4.6 | N/A | N/A |
| Domestic air courier | 0.3 | -3.8 | -11.5 |
| International air courier | 0.0 | -3.8 | -11.5 |
Water
Transaction prices reported by Bureau of Labor Statistics for U.S. water transportation services show overall prices are falling from year-ago levels at an ever-increasing pace. In May 2009, water transport tags dropped 5.8% from a year ago. Our forecast shows average prices falling in September 2009 at a 13.9% year-ago pace. Looking deeper, we see year-ago deflation rates for shipping on inland waterways down 2.3% in May 2009 and then plunging 23.4% in October. Deep-sea transportation prices, meanwhile, were down 12.3% in May and are predicted to be falling at a 23.9% pace in September. A buyer's market this year and most of next year will prevail.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | -0.6 | -12.9 | -12.3 |
| Coastal & intercoastal freight | 0.8 | -1.3 | 0.4 |
| Grt. Lks.-St. Lawrence Seaway | -2.6 | -5.9 | -2.3 |
| Inland water freight | -1.5 | -9.6 | -2.3 |
Rail
The railroad industry has shown nascent signs of stemming the ravages of recessionary price cuts. In May, both intermodal and carload rail prices increased 1.3% from the previous month. That was the second month in a row for price hikes, after a string of seven consecutive months of price declines. We're betting the rail industry will be forced by the recession to give back those price hikes in June, but given how out-of-the-norm the trends are these days, the forecast exercise here seems more like a game of darts. The next couple months will tell us a lot about where to reset the trend lines of the future.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 1.3 | -5.3 | -7.0 |
| Intermodal | 1.4 | -6.1 | -15.3 |
| Carload | 1.3 | -5.4 | -6.2 |
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