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

With the fourth quarter written in stone, it appears that the trucking industry will have boosted overall prices by 3.9% in 2004. Looking ahead, we forecast a 3.7% annual price hike in 2005. This will be the strongest two-year increase since 1999–2000, when prices jumped 3.5% and 4.7%, respectively. The troubling part of the recent inflationary bout lies in the fact that both less-than-truckload and truckload carriers are boosting rates at a steady pace. In November LTL prices increased 1.2% from the previous month, while TL prices grew 1% over the same period. In the six-month period from June to November, LTL prices were up a sharp 6.5% and truckload rose by 4.6%.

Gaining lift in prices for air transportation simply wasn't in the flight plan for 2004. With 11 months of data collected, it looks like prices for domestic air shipments overall and for scheduled flights will both have risen by an average of just 0.2% in 2004. This weak price hike comes on the heels of some fairly strong price increases. In 2002 and 2003, airfreight prices rose by 5.1% and 4.9%, respectively. All this lends perspective to our 2005 forecast, which calls for a price hike of 4.9%. In the most recent month of data reported (November 2004), prices for scheduled air freight increased 2% from a year ago and nonscheduled air service (freight and passenger) was up 0.6%.

The trend for water transportation rates appears to have settled on a more sedate path lately. The U.S. Bureau of Labor Statistics' transaction-price survey of deep-sea transportation companies shows prices up just 3% in the 12-month period ending November 2004, compared to the same period a year earlier. That's a far cry from the 19.6% and 17.9% jumps that the industry registered in the 12-month periods ending November 2003 and November 2000, respectively. After vaulting 18.6% in 2003, the annual inflation rate for the total U.S. water transportation industry, which includes coastal, Great Lakes, and inland waterways, will stall at 2.9% in 2005 after rising 2.7% in 2004.

Our database for rail transportation prices extends back only as far as December 1996, thanks to the federal government's recent conversion from the Standard Industrial Classification (SIC) to the North American Industry Classification System (NAICS). So we can safely say that the 4.1% gain in rail freight prices in 2004 was the largest on record over the past eight years. Looking to 2006, the forecast calls for rail prices to rise by another 3.4%. It's likely that carload price hikes will continue to be the engine of this inflation trend. By product shipped, we see that farm products come out on top with an 11.5% price hike from June 2004 to January 2005. Lumber shippers, food producers, and metal workers saw rail freight prices jump 7.5%, 6%, and 5.4% respectively.