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

The trucking industry reports that from November to December 2006, average prices for long-distance LTL service rose 0.9%, and TL tags fell 0.6%. Long-distance carriers that haul specialized freight like chemicals and lumber cut their prices 0.4%. Overall, average trucking prices fell 0.3%, the third consecutive monthly price cut. Despite these monthly declines, industrywide prices in the final quarter of 2006 remained 1.6% higher than levels set in the same period of 2005. For the year, average industry prices were up 3.8%, with TL up 3.1% and LTL up 5.2%. Our 2007 forecast now calls for overall prices to increase by 2.7%, with TL up 2.1% and LTL up 4%.

Shipping on scheduled, U.S.-owned airlines got a bit more affordable in December as prices fell 0.7% from the previous month and 1% from the same month a year earlier. Charter companies transporting both passengers and cargo raised their prices by 1.8% and 9.6% over the same periods. Prices were down across the board from November to December for domestic and international air couriers and freight forwarders. But domestic air couriers managed a 7.7% price hike for all of 2006, while international couriers boosted annual prices by 14.5%. Our forecast for scheduled, U.S.-owned airlines sees average prices rising 1% in 2007 after a 3.4% price hike for all of 2006.

The rate of inflation for shipping by water continued to slow at the end of 2006. Overall, average prices for waterborne transportation fell 0.2% in December, following a 1.5% drop in November. These price cuts left average water transportation rates at the end of 2006 at about the same level as they were in April of last year. The biggest pricing challenge remains in inland waterways shipping. Here prices ebbed 0.1% in December on the heels of November’s satisfying 5.4% drop. Still, looking at all of 2006, inland waterways prices escalated at a 19.6% annual rate, far outpacing the inflation trends of all the other waterborne categories surveyed. Looking ahead, water transportation prices are forecast to rise 4% overall in 2007.

Average prices charged by U.S.-owned railroads fell 1.6% in December. In the final quarter of 2006, rail transportation prices were 4.4% higher than the same period the previous year. That was the slowest inflation rate since the third quarter of 2004. Carload prices showed more weakness at the end of 2006 than did intermodal, though both were relatively weak. The inflation trend for rail freight prices appears well set now. The rate of inflation peaked at 13.5% in the final quarter of 2005 and has generally been trending down since then. Still, don’t expect a return to days of old when inflation kept on a steady 2% to 3% track. In 2007, we forecast the rail industry will increase prices by 5% on average.