Average prices for trucking and courier services bounced back up 0.2% in January 2002 after a sharp 0.7% price decline the previous month. The impetus for January's gain came from less-than-truckload carriers, whose rates rose 1.6% on average. Truckload carriers, meanwhile, watched rates slip by 0.5%, representing the fourth monthly price drop in a row. Our outlook for trucking and courier prices hasn't changed much: We expect prices to rise just 1.6% in 2002, reflecting a very slow rebound from the current recession and increasing competition from rail.

Last month, we reported there had been a steep fourth-quarter decline in average water rates. Most shocking, we thought, was a 4.9% monthly price drop in October 2001. We said this price slide wouldn't last, and it didn't! In fact, according to revised data released by the Bureau of Labor Statistics, that October price cut never happened. Now the BLS says average rates actually rose 0.1% in October before dropping 2.1% in November, 1.1% in December and 0.1% in January. Our forecast, meanwhile, indicates water rates will rise just 2.0% on average in 2002.

Railroads may have seen a decline in chemical and steel shipments, but that has not stopped them from raising rates. In January 2002, average linehaul rates increased 0.8% from December levels and 3.5% from year-ago numbers. Shippers that move lumber were hit with the largest monthly price hikes—5.6% on average—and shippers of metal ores saw rates rise by 4.0%. January's rate spike made our near-term price forecast for rail services look too conservative. Instead of a 1.4% year-ago gain in 2002's first quarter, we now foresee a 2.8% increase.

So much for the smooth flight we had expected in aircargo rates. The price index for aircargo services hit 117.6 in January, sharply overshadowing December's index of 112.3. In January 2002, moreover, average rates for scheduled aircargo transportation increased 4.7% over levels recorded the previous month. That was the sharpest one-month price hike reported since October 2000, and it means the takeoff point for our 2002 price forecast will be significantly higher than we had expected. As a result, our new forecast calls for a 2.0% price hike in 2002.

Freight forwarding

The latest Bureau of Labor Statistics price data on U.S.-based freight forwarders show an industry slowly succumbing to deflation. Compared to year-ago levels, average rates dropped 0.2% in November 2001, 0.2% again in December 2001 and 0.4% in January 2002. At the same time, forwarders' labor costs have been rising. Indeed, average hourly earnings peaked at $16 an hour in December 2001. With abundant labor available in this recessionary economy, however, labor cost inflation surely will slow down in 2002.

Warehousing services

After a 4.9% wage hike in 1999 and a 4.7% jump in 2000, public warehouse operators saw their labor cost inflation slow to 3.7% in 2001. By December 2001, average hourly wages stood at $12.96. Meanwhile, average prices for warehousing and storage services grew 2.6% in 2001 as expected. As for 2002, our forecast calls for public warehousing rates to rise less than 2.0% on average. With an economic recovery slow to emerge, pressure will remain on public warehouses to hold the line on prices.