The rate of inflation for trucking services slowed to a crawl as far back as October and November 2000, but the real crunch hit in December 2001 when average rates charged by trucking and courier services (excluding air) actually dropped 0.7% from November 2001 levels. That was the first monthly decline since October 1999 (when prices dipped 0.2%) and the largest since July 1996 (when prices also fell 0.7%). Less-than-truckload prices, down 2.8% from November levels, led the deflation caravan, followed by truckload prices, which dropped 0.5%.

You knew it was only a matter of time before the price index for water transportation started to reflect the global economic slowdown, but who knew how quickly this ship could turn? Average cargo carrier rates fell 4.9% in October, 2.1% in November and 1.1% in December. The last time this industry recorded a string of monthly price declines was at the end of 1998. Our forecast assumes this steep price slide won't last if only because shippers and carriers may soon have to cover the increased costs associated with screening containers for terrorist bombs.

Linehaul operators pushed through an unexpected price hike in the final quarter of 2001, when average rates for rail services (both passenger and freight) jumped 3.7% over year-ago levels. In December, average prices for shipping metal products increased 2.1% from November numbers and 6.8% from year-ago levels. Rates for shipping transportation equipment decreased 0.2% from November prices but are up 27.3% from December 2000. Our forecast calls for linehaul rates to increase another 1.4% from year-ago levels in 2002's first quarter.

The heady days of rate inflation in the aircargo and air courier sector appear to be just a distant memory now. In the final quarter of 2001, average rates for shipping cargo on scheduled flights tumbled 3.2% from year-ago levels. For the entire year 2001, prices inched up just 1.5%, and we expect prices to fall 0.1% in 2002. Air courier service, however, is a different story. Here sharp monthly price hikes have moderated to a no-growth pattern. But these price data are gathered by the Labor Department's transaction price survey and do not include any increases in special fees, such as FedEx's 20% hike for hazardous material air deliveries.

Capital equipment

For truckers who upgraded their fleets in 2001, sticker shock was not much of a problem. In fact, according to the U.S. Bureau of Labor Statistics, the average price for truck trailers and chassis (those that carry 10,000 pounds per axle or more) fell 1.2% from December 2000 to December 2001. Equipment bargains included closed-top dry freight vans (down 1.5%) and platform trailers (down 1.7%). Not all prices dropped, however. Prices for smaller truck trailers (under 10,000 pounds per axle) increased 0.5%.

Fuel

Carriers who absorbed huge fuel price hikes 12 months ago probably ended the year ahead of their cost projections. Heavy shipments of gasoline from Russia and Europe plus a drop in OPEC's crude oil prices (to just $18.09 a barrel by December 2001) combined to cut the average gas prices in the United States by 34.3% between December 2000 and December 2001. But with a little help from non-OPEC oil exporters, the OPEC cartel expects to get that price up to the $22.00-to-$23.00 range.