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

The U.S. trucking industry continued to push average transaction prices upward at a steady pace in September as prices gained 0.4%. That marked the ninth consecutive monthly increase, ranging from 0.2% in March to 0.7% in February and May. Over the third quarter of 2004 prices rose 4.1% from the same period a year earlier, with LTL leading the way as usual, up 5.4%. Average prices for truckload service, meanwhile, rose 4.2%. For the final quarter of 2004, we forecast an overall increase of 4.6%. Inflation in trucking rates will shift into a lower gear in 2005. Nonetheless, we have raised our annual forecast to 3.7% and 3.3% in 2004 and 2005, respectively.

The domestic airline industry is still struggling with low passenger volumes; as a result, airline prices dropped 2.7% in September. Looking at cargo on scheduled flights, however, we see that prices fell only 0.1%. Fuel surcharges may not be sticking among U.S.-based airlines, but air courier services are definitely raising their prices to counteract higher costs. In September, domestic air courier services hiked tags 0.6% from August 2004 and 8% from September 2003. International air courier services increased prices by 0.2% and 6.5% over the same time periods. Our outlook: Airline prices overall will rise 1% in 2005 after a 0.6% hike in 2004.

Shippers who move freight by water weathered a wave of mild proportions in September. As surveyed by the U.S. Department of Labor, average prices increased 2.5% from August. That was the largest monthly price hike since July 2003, when tags rose 4.5%, but still a far cry from the 12% price hike we saw in May 2003. Deep-sea freight set the pace with prices up 2.5%, while coastal transportation rates rose 0.2%. Inland waterways charges, though, took a surprising 5.8% swing upward. We are temporarily unable to forecast water transport prices due to the loss of historical data when the government changed its statistical recording method from the SIC to NAICS system.

Average prices for intermodal rail service jumped 1.4% in September, while carload rates grew a meager 0.1%. But when we compare prices to those charged a year ago we see a different story, with intermodal up 3.1% and carload up 4.4%. Those hikes clearly have been influenced by mismanagement of equipment, as supplies did not meet demand in some locales and for some commodities. Farm products are a case in point. Price hikes for shipping agricultural goods in carloads were among the highest, up 9.5% from September 2003 to September 2004, and up a whopping 18.1% from our benchmark year of 2001. Yet the cost for carloads of metal ores was up only 4.6% from September 2003 and rose a mere 3% since 2001.

In September our aggregate price index for all transportation support services fell a tenth of a percentage point from August and was up just 2.4% from September 2003. More significantly, the index stands at 101.4—meaning that prices have risen just 1.4% from 2001's average levels. Even despite hikes in fuel fees, prices for air support services are up just 1.8% over the past six months, thanks to a 5.1% drop in fees for ramp service, aircraft parking, tiedown, and storage. Prices paid for fuels and lubricants, though, were up 7.9% over the same period. A roundup of other support providers shows prices over the past six months rose as follows: marine cargo handling, up 1.2%; navigational services and vessel docking and undocking fees, up 3.4% ; and freight forwarding up 3.1%.