CARRIER COSTS AND DEMANDS AFFECTING TRANSPORTATION SERVICE PRICES

By Staff -- Logistics Management, 2/1/2001

Inbound Freight

Concerns about inbound freight costs are widespread but perhaps overblown. Since the start of 2000, 80% of U.S. manufacturing industries have seen the amount spent on getting raw materials to the factory floor grow as a percentage of manufacturing costs. But the vast majority of these industries still spend less than 5.0% of their direct manufacturing budgets on inbound freight.

Corrugated Boxes

Over the last 36 months, prices for corrugated and solid fiber boxes jumped 22.1%, even though analysts at Thinking Cap Solutions say the average cost of making boxes increased just 8.4%. This puts logistics managers in a strong negotiating position when they go to purchase boxes. Although we forecast that box prices will fall 1.3% by May, that decline will not greatly compromise suppliers' profits.