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

The most recent survey data from Bureau of Labor Statistics shows average prices charged by U.S. trucking companies increased 0.9% in April. LTL carriers led the way with a 1.9% average price hike. Even the recently beleaguered TL market pushed tags up 0.9%. These actions underscore our forecast: The slowdown in inflation that characterized this industry in the final quarter of 2006 and first quarter of 2007 isn't likely to continue. But, trucking tags won't shift into high gear too rapidly. The forecast indicates that trucking transaction prices will rise at the same-quarter-year-ago pace of 2.4% in the second quarter of 2007, 3.4% in the third quarter, and 3.6% in the fourth quarter.

The prices charged for shipping freight on scheduled airline flights are in the midst of a major trend change. Average prices in April did not change from March levels. However, the price changes on a three-month-moving average show a shift that favors shippers. In the three-months ending November 2006, transaction prices for flying mail and property on U.S.-owned planes fell 0.6% from the same three-month period a year earlier. By April 2007, the three-month-change-from-year-ago deflation rate accelerated to negative 3.1%. This trend won't last past the second quarter of 2007 and airlines aren't suffering too much as they are lifting passenger fares without much trouble.

In April 2007, average waterborne freight prices charged by U.S. owners of barges, tugboats, and ships decreased 0.2% from the previous month and increased only 1.2% from the same month in 2006. The Great Lakes-St. Lawrence Seaway freight transportation prices jumped 6.1% from a month ago and 10.2% from a year ago. On the other hand, inland water freight transportation prices are finally coming down nicely after Hurricane Katrina so disrupted capacity. In April, prices for shipping on the Mississippi and other inland waterways fell 2.4% from a month ago and dipped 0.3% from a year ago. This U.S.-centric data, however, doesn't capture the containerized market, where shipping lines are working to maintain and even increase rates.

Demand for rail service may be down, but data from Bureau of Labor Statistics suggests that rail operators are now managing to hold more firmly to their pricing positions. In April, average rail prices for intermodal service increased 1% from the previous month and 3.5% from the same month a year earlier. Average prices for carload service also grew 0.9% and 2.1% over the same time periods. Looking at quarterly price trends, after falling in the final quarter of 2006 and first quarter of 2007, we forecast average rail industry prices will rise again, albeit slowly. By the third quarter of 2007, average rail tags will equal price levels held in the third quarter of 2006. Inflation trends will resume with more force in the final three months of this year.