CARRIER COSTS AND DEMANDS AFFECTING TRANSPORTATION SERVICE PRICES

By Staff -- Logistics Management, 9/1/2000

Fuel

Crude-oil stockpiles in the United States are at their lowest level in 25 years. OPEC keeps promising to increase output but has been unable to deliver on that promise. Some energy analysts say a fairly serious energy crisis may occur this winter. As a result, carriers' fuel costs are unlikely to fall anytime soon. In the meantime, the average price for finished motor gasoline in July 2000 fell from June levels, but prices for both jet fuel and diesel fuel increased.

Capital Equipment

Despite weak demand, the cost of purchasing trucks and aircraft keeps getting higher. For example, in July 2000, average prices for truck trailers and chassis that weigh 10,000 pounds or more per axle rose 0.8% from June levels and are now up 3.1% from year-ago figures. Similarly, average prices for engines used in civilian aircraft jumped 2.0% between June and July 2000. Higher interest rates, of course, are the main culprit in the hike.