Pricing Across the Transportation Modes

By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 1/1/2006

TRUCK

Average prices for shipping via truck decreased by a meager 0.1% in November—the first monthly decline since December 2004. The culprit seems to have been LTL carriers, who reported that average tags fell 0.6%. Truckload carriers, by contrast, raised prices by 0.5% on average. In fact, all of the inflation
action we’ve seen lately has been in the TL sector. But when we compare prices to a 2001 base period, we see that TL rates are up 28% while LTL rates are up a much stronger 95.5%. TL carriers will have to put the pedal to the metal if they hope to catch up to LTL pricing increases. In Q1 2006, overall trucking prices are forecast to rise 7% compared to the same period in 2005.

% CHANGE VS.:	1 month ago	6 mos. ago	1 yr. ago
General freight - local	-1.5	0.6	3.7
Truckload	0.5	3.8	6.7
Less-than-truckload	-0.6	3.3	6.8
Tanker & other specialized freight	-0.2	3.0	5.9

AIR

Domestic airfreight prices have been flying high. Average prices for scheduled domestic flights rose 9.7% in November from the same month a year earlier. The last time this industry pushed through such a large year-on-year increase was August 1993, when prices soared 9.9%. If current trends hold true, prices will increase 5.6% in 2006, after an estimated 5.2% hike in 2005. Meanwhile, air couriers have been doing a stellar job of getting a handle on their prices. After adding in surcharges,
average prices for domestic air courier service in November jumped 3.1% from October and 9.4% from a year earlier. International courier prices rose 5% and 11.8% over the same periods.

% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago

Scheduled air freight 1.6 6.1 9.7

Chartered air freight & passenger -0.1 1.6 5.4

Domestic air courier 3.1 4.7 9.4

International air courier 5.0 6.5 11.8
WATER

The inflation waters appeared calm for inland waterways and deep-sea shipping in November, but looks can be deceiving. Prices for both markets didn’t budge from October. Price comparisons, however, fall apart outside of that one-month view. Over the three-month period ending November 2005, prices for inland waterways shipping surged 27.2% compared to the same period in 2004. Prices for deep-sea shipping, though, inched up just 0.9%. Comparing prices against a 2001 base, we see inland waterways prices are up 42.9% and deep-sea services are up 35.8%. Looking ahead, we forecast prices for all water transportation services will average an 8% hike in 2006.

% CHANGE VS.:	1 month ago	6 mos. ago	1 yr. ago
Deep-sea freight	0.0	0.8	1.1
Coastal & intercoastal freight	0.0	4.3	14.5
Grt. Lks.-St. Lawrence Seaway	1.3	3.3	6.7
Inland water freight	0.0	23.2	27.1

RAIL

The rail freight industry continues to achieve higher-than-expected price hikes. In November, average prices for railcar service jumped 1.7%. That was the fourth consecutive month the railroads recorded a solid price increase. Prices for carload services were up 13.8% in November compared to a year ago. Intermodal service pricing, meanwhile, increased by 0.4% in November. That wasn’t as sharp an increase as the 3.5% hike in October or the 2.8% gain in September, yet from November 2004 to November 2005, intermodal prices nonetheless were up 14.8%. With these gains under consideration, a significant revision to the rail freight forecast was inevitable. Our outlook now calls for a 10.5% overall price increase in 2006.