Market Watch

By Staff -- Logistics Management, 5/1/2000

Trucking

Higher gasoline prices and continued labor shortages are wreaking havoc on our forecasts for trucking rates. In March, for example, rates for less-than-truckload intercity trucking services jumped 1.5% from last month's levels and 6.8% from year-ago levels. Our updated forecast calls for all intercity and local trucking and courier services to raise prices by 3.1% above year-ago levels in the final quarter of 2000. That's about a full percentage point higher than the forecast we published last month.

% CHANGE VS.:	1 month ago	6 mos. ago	1 yr. ago

Less-than-truckload	+1.5	+3.0	+6.8
Truckload	+0.5	+1.2	+1.8
Agricultural--not local	+2.3	+2.8	+3.5
General freight--local	+0.4	-0.1	+0.1
Agricultural--local	0.0	+1.7	+1.7

Rail

In the first quarter of 2000, linehaul operating rail rates jumped 1.2% from year-ago levels. That occurred after four quarters of declines in rail rates, and it signals a new inflationary trend that logistics managers need to watch. The continuing strong economy coupled with shortages of track and equipment are rewriting the rail industry's supply/demand fundamentals. Our forecast for rail rates reflects this new reality. We now predict average rail rates will rise 2.8% above year-ago levels in the final quarter of 2000.

% CHANGE VS.:	1 month ago	6 mos. ago	1 yr. ago

Coal/Petroleum	0.0	0.0	+0.1
Chemicals	+0.5	+0.7	+1.0
Farm products	-0.5	-0.5	+1.0
Motor vehicles	+0.3	0.0	0.0
Metallic ores	0.0	+4.8	+1.9

Water

Transporting freight via water isn't getting any cheaper these days either. In the first quarter of 2000, average water rates rose 10.5% from year-ago levels. The trouble remains mostly in the deep-sea movement of freight via foreign carriers. In March, these rates fell 1.2% from February levels but remained up 23.9% over March 1999 prices, thanks to earlier inflationary trends. We have revised our forecast for overall water transportation rates upward. By the final quarter of 2000, we expect rates for water carriers to be up 6.5% from year-ago levels.

% CHANGE VS.:	1 month ago	6 mos. ago	1 yr. ago

Inbound liner	0.0	+1.9	+67.0
Outbound liner	+0.6	-6.2	-7.8
Domestic deep sea	+0.1	+3.3	+4.8
Grt. Lks.-St Lawrence	0.0	0.0	-0.3
Mississippi River	+1.5	-1.4	+10.5

Air

With the sharp rise in jet fuel costs, air carriers haven't been immune to the pressure to raise rates. In March, domestic air couriers raised their rates by an average 5.7% above February levels and 11.5% above rates recorded a year ago. The cost to ship cargo via scheduled air services actually fell 0.7% between February and March 2000 but remains 0.9% above year-ago levels. We have adjusted our forecast slightly to account for the increase in fuel costs. We now predict inflation in air transportation prices (for cargo and passengers) to peak at a 2.0% rate in the third quarter of 2000.