Pricing across the transportation modes

By Elizabeth Baatz, Thinking Cap Solutions -- Logistics Management, 10/1/2006

TRUCKING

Average prices charged by all trucking segments increased 0.7% from July to August. That was the largest one-month price hike since last May, when tags rose 1.5%. Compared to August 2005, trucking prices overall were up 5%. The most striking thing about recent trucking industry price hikes is that nearly all market segments are pushing through fairly significant increases. Looking once again at August 2006 versus the same month a year ago, we see that long-distance LTL carriers hiked their prices a hefty 6.5%. Local trucking of both specialized freight and general freight also cost traffic managers more compared to August 2005—4.7% more, to be precise. Finally, bargain hunters had to settle for a 4.5% price hike earned by intercity truckload companies.

According to Labor Department surveys of domestically owned airlines, transaction prices for moving cargo on scheduled airline flights plunged 4.2% from July to August. That price cut effectively wiped out the 4.2% price hike that was pushed through in the April-to-May time period. Still, when we look at a three-month moving period of June-July-August, we can see that prices were up 5.6% from the same three months a year earlier. That represented a slowdown from the 7% price escalation seen in the first quarter of 2006, but it wasn’t too far off the 4.4% rate registered in the dog days of summer in 2005. In contrast, shippers paid 10.3% and 17.2% more, respectively, to move packages and mail via domestic and international air couriers over the summer months.

Based on the U.S. Labor Department’s survey of domestic shipping companies, it appears that pricing for shipping over the seven seas remains under control. In August, deep-sea freight transportation prices fell 1.4% from the previous month and were up just 0.3% from the same month a year ago. Unfortunately, shipping on any other body of water hasn’t been such a bargain. The average price for shipping on inland waterways(excluding towing) was up 24% from August 2005 to August 2006. Inland waterways towing prices were also up 13% over the same time period. Meanwhile, Great Lakes-St. Lawrence Seaway transportation prices jumped 7.7% and tags for coastal and intercoastal freight transportation increased 6.4%.

The inflationary situation that is confounding shippers who rely on rail service appears to be here to stay. In August, intermodal rail carriers pushed through a 2.1% price hike. That was the seventh price hike in as many months and the third monthly price increase to exceed 2%.In the 12-month period ending August 2006, intermodal transaction prices were up 10.3% from the same 12 months a year earlier.Over the same time period, transaction prices for carload service were up 11.3%. Although carload inflation is higher than that for intermodal, it isn’t as troubling. That’s because the rate of price escalation in the carload sector has actually been decelerating since April 2006.