Average rates for trucking and courier services held steady between January and February 2002. But looking at the intercity shipping of general freight, we see that average rates actually fell 0.3% and 0.4% for truckload (TL) and less-than-truckload (LTL) service, respectively. Truckload operators are bearing the brunt of the slowdown in shipping: February marked the fifth month in a row for rate declines. When first-quarter 2002 results are tallied, we expect average rates for TL service to be down 1.0% from year-ago levels—the first time we've seen quarterly rates fall below year-ago levels since 1994.

What a difference a recession makes! When numbers for 2002's first quarter are tallied, average rates for water transport will likely be up just 2.3% over year-ago levels. That's a sharp slowdown in inflation for an industry that pushed through an average 8.2% rate hike in the first quarter of 2001. Shippers that move freight over the Mississippi are getting the best bargain—in February 2002, average rates fell 1.7% from January levels and 6.1% from February 2001 numbers. Shippers that use inbound liner service, by contrast, found their rates rose during that period.

Reversing the previous month's rate hike, linehaul operators reduced rates for their services by 0.8% on average in February 2002. Rates for hauling automobiles and other transportation equipment dropped 10.8% on average and rates for moving metal products slipped 3.3%. Shippers who rely on intermodal rail service, however, saw average rates inch down a lesser 0.3%. The weak U.S. economy is finally catching up with rail operators. As a result, we forecast average rail service rates will rise just 0.9% in 2002 after a 2.0% gain in 2001.

After soaring 4.7% in January, average rates charged by aircargo carriers fell 0.2% in February 2002 but remained 3.0% above rates set a year earlier. It appears that where rates are concerned, the skies haven't been as turbulent as expected. Shipping freight by air became more competitive in 2001 when average rates for shipping via scheduled flights fell 3.6%. A rebound in the economy and the airline industry will help boost aircargo rates in 2002 and 2003. Air courier companies, meanwhile, pushed through a 2.5% rate hike for international service and a 0.2% increase for domestic service.

Fuel

According to the Department of Energy, average gas prices are likely to rise 15.0% this summer. Blame margins. Everywhere but California (where emissions regulations insulate the market), U.S. refiners have been struggling with extremely tight margins. As a result, refiners are now looking for any opportunity to raise prices. Though margins grew by $4.94 per $100 of product sold in February 2002, producers have very few cost-cutting options left, which means that price hikes will be the main tool for margin enhancements in the months ahead.

Corrugated boxes

Logistics managers who buy corrugated boxes saw average prices fall 1.1% this past February. However, seasonal trends combined with increased demand mean prices are likely to rise 0.5% in the second quarter. But that doesn't mean that box buyers have no room to negotiate. Overall inflation-adjusted margins in the box industry improved in eight of the past 11 months. If the industry were to push its margins back to average levels held over the past five years, then producers could afford to drop prices by 5.9%.