Price Trends
Pricing Across the Transportation Modes
By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 3/1/2008
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@ice-alert.com
Trucking
Talk of overcapacity and recession are making shippers more aggressive in their rate negotiations. Recent data from the trucking companies that report transaction prices to the Bureau of Labor Statistics suggest shippers are winning. LTL carriers report their average prices fell 0.4% from December to January and TL companies reported a 0.5% price cut. Compared to January 2007 prices, LTL and TL tags were up 5% and 2.2%, respectively. Inflation pressures, however, persist for buyers of local trucking services. In January, prices increased 2.3% from a month ago and 9% from the same month a year ago. Looking ahead, the trucking industry price index will increase a revised 1.4% in 2008.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | 2.3 | 5.2 | 9.0 |
| Truckload | -0.5 | 2.0 | 2.2 |
| Less-than-truckload | -0.4 | 1.6 | 5.0 |
| Tanker & other specialized freight | 0.6 | 1.6 | 2.5 |
Air
In January 2008, wholesale jet fuel prices soared another 9.3% from a month ago and stood 54.9% above year-ago price levels. Pushing all costs to buyers has been an impossibility, but domestic airlines have pushed through the best price hikes possible. In the latest monthly report, prices for flying cargo on scheduled flights increased 1.1% from a month ago and were up 6.1% from the same month a year ago. Meanwhile, in the air courier business, recent Labor Department price surveys show the domestic air courier business absorbing a rare 2.7% one-month price cut and international air courier companies managing to push through a modest December-to-January 0.6% price increase.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | 1.1 | 3.6 | 6.1 |
| Chartered air freight & passenger | 1.1 | 4.3 | 8.1 |
| Domestic air courier | -2.7 | 4.8 | 9.0 |
| International air courier | 0.6 | 3.6 | 7.6 |
Water
Just when we thought it was safe to forecast a cessation in water transport price inflation, along came January 2008 data. Labor Department surveys show coastal and intercoastal towing services swamped our forecast models with a 20.8% one-month price hike. Prices for inland waterways freight transportation, excluding towing, also defied expectations with a 10.8% December-to-January increase. Compared to year-ago price levels, tags for towing services were up 31.6%, and inland waterways services were up 16.3%. Prices for inland waterways towing also increased 4.5% from a month ago and 9.2% from the same month a year ago. Our forecast looks murky now, but it hasn't been recalculated yet. We'll report new forecasts in next month's Price Trends column.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | 0.0 | 0.0 | -0.2 |
| Coastal & intercoastal freight | 1.5 | 2.6 | 9.0 |
| Grt. Lks.-St. Lawrence Seaway | 2.7 | 5.8 | 14.9 |
| Inland water freight | 9.6 | 5.7 | 14.9 |
Rail
Railroads are exercising their price-hike options even as carload traffic slows and the number of trailers fall in the first weeks of 2008. Sadly for shippers, higher prices appear to be sticking. On the heels of a 5.1% price surge in December 2007, the intermodal rail industry cut its average transaction price by only 0.3% in January 2008 leaving intermodal rail service tags up 11.8% over year-ago levels. On the carload side, thanks to strong demand from the grain and metals markets, average prices increased 3.7% from a month ago and now stand 12.9% above a year ago. A slowdown or recession in the housing market might soften rail prices in months to come, but railroads will retain the negotiation edge.
| % Change vs. | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 3.2 | 7.4 | 12.5 |
| Intermodal | -0.3 | 5.6 | 11.8 |
| Carload | 3.7 | 7.8 | 12.9 |
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