Average prices for truck transportation service increased by 6% and 5.7% in April and May, respectively, compared to the same period last year. Although a slower 5.3% price hike is forecast for June, trucking prices for the second quarter of 2005 will have jumped 5.7% from year-ago levels. That’s the sharpest quarterly price jump since the final quarter of 2000. Our Q2 estimate is a 7.8% increase for less-than-truckload service and a 5.4% rise for truckload compared to the same period a year earlier. Looking ahead, it's clear that our forecast needed an upward revision. Average trucking prices are now forecast to increase 4.7% in 2005 followed by a 4% annual price hike in 2006.

In the three-month period ending May 2005, average prices for shipping freight on scheduled U.S. airline flights increased 5.6% from year-ago levels. A year earlier, prices were falling at a 3.1% rate for the same three-month period. And two years before that, in May 2003, prices were soaring at a 7.7% rate. With such a rollercoaster record, where do we see prices flying in the future? If the cyclical trend of the past 10 years is any guide, then inflation in airfreight rates should slow down. After rising at a 5.9% year-on-year pace in the second quarter of 2005, scheduled airfreight prices are forecast to rise at a more sedate 2.6% rate in the second quarter of 2006. As for annual inflation rates, we expect airfreight prices will rise 3.3% in 2005 and 2.4% in 2006.
 

While global rates for shipping dry bulk cargo are slipping due to a slump in China’s steel sector, average prices reported by U.S.-based carriers for hauling freight over water are continuing to rise. In May 2005, average prices for water transportation service increased 0.7% from April and 5.4% from May 2004. As reported to the Census Bureau’s producer price index survey, deep-sea transportation prices grew 3.2% from May 2004 to May 2005, with prices on the Great Lakes-Saint Lawrence Seaway increasing 5.2% and inland water shipping tags jumping 16.4% over the same time period. Our water transportation price forecast calls for an annual inflation rate of 4.2% in 2005 and 5% in 2006.

In a surprisingly strong move, rail freight prices jumped 3% from April to May 2005, the sharpest monthly price hike in at least the last 15 years. This action pushed average prices up a whopping 9.4% in the three-month period ending May 2005 compared to the same three months a year ago. The previous quarterly inflation record occurred in the first quarter of 2005, when rail freight tags grew 7.7%. In 2004, average prices were up 3.3% in Q2, 4.6% in Q3, and 6.8% in Q4. Notice a trend? Yes, rail freight inflation has been accelerating steadily, driven by carload price hikes. Thanks to projected price hikes of 10.6% in 2005 and 9% in 2006 for carload service, the rail freight industry’s overall annual inflation rate is forecast to hit 8.5% in 2005 and 8.4% in 2006.