Price Trends
Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 10/1/2009
Source: Elizabeth Baatz, Thinking Cap Solutions. E-mail: ebaatz@alertdata.com
Trucking
At first glance, Bureau of Labor survey data of trucking companies suggest pricing power has shifted to carriers. The aggregate price index for all types of truckers increased 0.3% in August. Our forecast has been subsequently revised upward. We're now showing a 4% average annual price decline by the time 2009 closes and a 2.2% price increase in 2010. This is a cautious forecast and could be revised sharply upward as carriers gain traction in a reviving economy. Look deeper, however, and you'll see long-distance LTL and TL trucking companies didn't participate in the price resurgence. LTL and TL prices, respectively, declined 1.5% and 0.6% from a month ago and dropped 4% and 10.5% from August 2008.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| General freight - local | 3.3 | 5.9 | -3.1 |
| Truckload | -0.6 | 0.3 | -10.5 |
| Less-than-truckload | -1.5 | 0.0 | -4.0 |
| Tanker & other specialized freight | 0.8 | 4.6 | -3.4 |
Air
After 2008's 17.3% average annual price hike charged by U.S.-owned airlines for flying cargo on scheduled flights, it made sense to see the recession and cuts in fuel costs power sharp price drops. The question all along has been: How low will air cargo tags go before airlines regain pricing power? Over this past February through June, we had forecast the Bureau of Labor's scheduled air cargo prices to fall between 4.5% and 6.9% in 2009. After June's record-breaking 11.5% one-month price cut, we revised that down. Now, we've seen two months of price hikes. Trending prices upward at a very conservative pace yields a new forecast with prices falling 8.6% annually in 2009 and rising 0.5% in 2010.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Scheduled air freight | 6.6 | -2.0 | -14.3 |
| Chartered air freight & passenger | -3.3 | -5.7 | -17.2 |
| Domestic air courier | 3.9 | 3.9 | -12.7 |
| International air courier | 1.2 | 1.2 | -14.3 |
Water
U.S. owned and operated water transportation companies reported a 0.9% price hike for hauling freight over inland waterways and a 0.3% price increase for Great Lakes and St. Lawrence Seaway service in August. Elsewhere, prices either stayed steady or increased a bit. Our forecast for water transportation prices at the aggregate industry level remains unchanged for 2009 as it appears that the industry remains on track for a 9.3% annual price decline. However, we're raising the inflation forecast to a still relatively conservative 0.7% price increase in 2010. With no historical precedence for current pricing trends, new cost models we're building should provide extra insights to help tune these price forecasts.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Deep-sea freight | -0.2 | -5.9 | -24.2 |
| Coastal & intercoastal freight | 0.0 | 6.3 | -2.9 |
| Grt. Lks.-St. Lawrence Seaway | 0.3 | -3.6 | -2.9 |
| Inland water freight | 0.9 | -13.8 | -16.6 |
Rail
After three quarters of price cuts in the rail industry, Q3 of 2009 will end that trend. In August, intermodal rail freight prices increased an average 0.8% and carload tags jumped 2.1% from a month ago. Overall, prices are likely to increase 1.9% in Q3. While that still leaves prices 9% below year-ago levels, the rail industry is one mode that will emerge from its deflationary hole more easily than others. However, due to the sharp price drops in the first half of the year, the industry is forecast to register a 5.8% annual price cut in 2009. Our forecast for 2010 now calls for a 3.5% annual price hike. That's a very conservative bet as the rail industry will boost prices much faster when consumer spending finally picks up.
| % CHANGE VS.: | 1 month ago | 6 mos. ago | 1 yr. ago |
| Rail freight | 1.9 | 2.4 | -8.9 |
| Intermodal | 0.8 | 4.8 | -15.8 |
| Carload | 2.1 | 2.1 | -8.3 |
Management Update
10/01/2009If at First You Don’t Succeed…
04/20/2009Price Trends
01/31/2008
View All On-Demand Webcasts
