Average prices charged by U.S.-owned truckingcompanies fell 0.5% in February, nearly reversing the 0.6% price hike in January. LTL prices for hauling general freight fell fastest, down 1.5%, while truckload tags fell a more modest 0.7%. Prices for local trucking of general freight, meanwhile, inched down 0.1%. Average prices for moving specialized freight over long distances actually increased 0.3% in February. Overall escalation rates for trucking are lower than expected. So, keeping the trend line for price levels relatively unchanged, our revised forecast now calls for aggregate trucking prices to increase 3.6% from the same period last year in the final quarter of 2007.

Domestic air freight price trends are performing better than expected. In February, prices fell 1.7%. After no change in average domestic air freight prices in January and a 0.7% price cut in December, these prices are almost back to levels last seen in June 2005. By the end of the first quarter, air freight prices will have fallen 2.6% from the same period a year ago. In the second quarter, prices will drop again by 1.1%, before making up ground in the second half of 2007. While air freight tags have become more affordable, air courier prices have gone up. In the first two months of 2007, prices for domestic and international air courier service were up 5.8% and 7.6%, respectively, from a year ago.

Average prices for moving freight over water increased 1.9% in February, say the latest surveys of U.S.-based barges and ocean carriers. That was fueled by a sharp 5.3% price hike for moving freight over coastal and intercoastal waterways and a 5.1% price increase charged by carriers on the Great Lakes and St. Lawrence seaway. Prices for coastal and intercoastal towing also jumped 9.5%. But, prices for shipping freight over inland waterways increased only 1.1% and deep sea freight transportation prices fell 0.8%. Our overall forecast for water transportation prices has been revised downward in the first half of 2007, but upward in the second half. All told, water transportation prices are still forecast to rise 4.1% in 2007.

Down 1.8% in February, average prices for intermodal rail service fell for the third consecutive month. At the same time, average prices for carload rail service increased 0.7%. But, intermodal and carload prices have more in common than the one-month snapshot shows. For example, February 2007 compared to February 2006 shows that intermodal and carload tags were both up 4.2% and 3.8%, respectively. Looking at a longer time frame, in the 12-month period ending February 2007 compared to the year before, prices were up 8% for intermodal and up 7.3% for carload. Overall, rail prices softened in the first quarter of 2007, so the annual price forecast for the year has been revised to 3.6%.