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

Trucking prices accelerated at the end of 2007, causing upward revisions to forecasts. In November, prices quoted by general freight long distance trucking companies jumped 1.2% from the previous month and 3.2% from the same month a year ago. That’s not all, says government analyst Christina Daniel, because LTL companies also reported a sharp upturn in prices charged for other non-primary special services like hauling scrap metal and packaging. Our forecast: all trucking industry prices will increase an average of 2.8% in the final quarter of 2007 from a year ago and will gain another 2.1% in the last three months of 2008.

The freight forwarding and the domestic air freight industries are making good use of any negotiating leverage if recent reports on price trends from the U.S. Bureau of Labor Statistics (BLS) are any guide. In October and November 2007, the freight forwarding industry hiked prices 4.1% from the same two months a year earlier while the air freight business operated by U.S.-owned airlines likewise upped their prices 3.7% over the same period of time. With jet fuel prices charged by domestic refiners in November still up 17% from a month ago and up a whopping 45% from a year ago, carriers have had a relatively easy time prevailing in their arguments for higher air transport tags.

The price data for inland water waterways shipping are finally falling. In October, these prices dropped 5.9% and then in November fell again by 10.3%. Those cuts wiped out the unexpected gains that BLS reported in August and September. Looking at the aggregate water transportation industry price index, we see an inflation trend that is weaker in the first quarter of 2008, but then resuming a path of steady price hikes. In the final quarter of 2007, prices in the entire water transportation industry will increase an average 2.4% from a year ago even as prices for inland waterways freight transport fall 1.2% at the same time. By the final quarter of 2008, all water freight prices will average a 1.9% year-ago price hike and inland waterway tags will fall 5.1%.

The sharp cyclical trend downward in rail freight transportation inflation, which had peaked at 11.5% in April 2006 and slowed to 2.7% in September 2007, took a U-turn at the end of the year. In October and November 2007, the intermodal rail industry increased its prices 6.8% from the same two months a year earlier, up from a 3.1% inflation rate in the first nine months of the year. Carload rail prices demonstrated a less dramatic inflation boost to 4.4% from 2.1% over the same time period. With these price hikes now in the history books and barring any unexpected data revisions, our rail transportation industry price forecast for 2008 has been revised upward from 1% to 2.8%.