Source: Elizabeth Baatz,Thinking Cap Solutions. E-mail: ebaatz@ice-alert.com

Logistics managers may be wishing trucking prices would slow down. In August, average prices for less-than-truckload increased 1.3% from the previous month—the fourth consecutive increase and the highest monthly gain since August 2002. Even truckload prices, which have been flat or down for years, rose in August by 0.8% over the previous month. That was the highest monthly gain since February 1996. These increases make earlier forecasts for our aggregate trucking/land courier price index appear a bit too optimistic. We now expect that index will log a 2.8% year-on-year gain in the third quarter and a 2.4% year-on-year hike in the fourth quarter.

The airline industry pushed through some substantial price hikes for cargo and mail in July but had to throttle back a bit in August. Prices for mail on scheduled flights fell 3.7% during that time, while prices for other types of cargo inched up just 0.3%. Prices for non-scheduled cargo, meanwhile, held steady. Domestic airlines remain under intense pressure to increase prices while cutting costs. That's not easy when their own service providers also are hiking prices. Indeed, prices for services that airports provide to passenger and cargo carriers rose 6.5% from August 2002 to August 2003. Prices for airplane fueling services soared by 12.4% over the same period.

Calm seas prevailed for water carriers in August 2003. According to the U.S. Department of Labor, overall water transport prices remained unchanged from July to August. Still, thanks to a 2.2% hike in July and a surprising 5.7% jump in May, we did revise our forecast. Our aggregate water transportation price index now appears set to hit a new high of 150.7 in the third quarter. That means prices will be up 50.7% since Dec. 1992 (the index base period). By the end of 2004, we expect that index will stand at 155. What's driving it up continues to be pricing for inbound deep-sea foreign transportation. Compared to August 2002, those prices are up a whopping 34.7%.

If rail freight prices are any guide, then an inflationary breeze is now blowing across the manufacturing landscape. In August, prices rose just 0.2% from July and were up 2.2% from August 2002. But shippers that use boxcars for agricultural products saw those prices rise 5.9% in the past 12 months. Chemicals shippers endured a 4.5% hike over the same period, followed by the stone, clay, and glass products industry, with a 4.4% increase. Rounding out the top five boxcar price hikes were transportation equipment (up 4%) and petroleum and coal (up 2%). Only the processed foods and metal ores industries walked away with price cuts, at 1.5% and 2.7%, respectively.