Market Watch

By Staff -- Logistics Management, 11/1/2000

Trucking

Trucking companies may be battling a tight labor market and higher prices at the pump, but shippers appear to be bearing their share of the burden. In the third quarter of 2000, average prices charged by trucking and courier services rose 4.1% from year-earlier levels. Looking at intercity LTL rates, for example, we see that average prices rose 6.6%. Overall, these are the highest inflation rates that shippers have faced in the past 10 years. We forecast inflation in trucking services will slow in 2001, but the damage to shippers' budgets has been done.

Water

In the third quarter of 2000, average prices for transporting freight by water rose 7.8% from year-ago levels. That was down from an 11.2% inflation rate recorded in April 2000, but it's still a far cry from the 3.5% April 1999 inflation rate. The problem, according to U.S. Bureau of Labor Statistics surveys, can be traced to continued rate hikes for inbound deep-sea foreign transportation of freight, where prices rose 19.5% between September 2000 and September 1999. But price hikes for stevedoring container services are also contributing to the inflation picture.

Rail

Rates for shipping freight via rail are moving full steam ahead. In the third quarter of 2000, average prices charged by U.S.-owned railroads rose 1.6% from year-ago levels. Our forecast calls for inflation in rail rates to continue accelerating through the final quarter of 2000 before calming down a bit in 2001. The hot economy provides the demand drivers for higher rail rates. Prices to haul stone and glass products, primary metals, and pulp and paper products have been hottest, up 4.6% to 3.7% between September 1999 and September 2000.

Air

U.S. airlines are doing such a good job of raising passenger air fares to offset higher jet fuel costs that the average price for shipping cargo by air has barely budged. Indeed, in September 2000, prices for scheduled aircargo transportation (including mail) were down 0.9% from year-ago levels. Prices for air passenger travel, meanwhile, rose 22.3% over the same time period. Air courier services also have boosted prices for domestic service by 10.3% and international service by 4.6%. The air carriers' and couriers' ability to hedge fuel purchases during these volatile times will remain a key factor in the rate outlook ahead.