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

The affects of the high cost of diesel and increasing fuel surcharges have emerged in Labor Department surveys. In April 2008, average prices in the entire trucking industry jumped 1.9% from a month ago and 6.2% from the same month a year ago. Looking at year-ago price changes, haulers of special freight hiked tags 10.3% for local service and 7.4% for intercity service. At the same time, long-haul general freight trucking companies pushed prices up 7.1% for LTL and 4.1% for TL services. Take-off points for forecasting have jumped too. Our forecast now shows average prices up 5.7% in 2008 and 4.8% in 2009, significantly higher than the 3.1% and 1.5% gains we had predicted last March.

Average prices charged by U.S. airlines to fly property and mail on scheduled fights increased 3% from March to April 2008. Alone, that number doesn’t sound too bad, however, a look at the rolling year-ago inflation trend explains why logistics managers are sweating. From the same month a year ago, these air cargo prices jumped 14.3% in April, 11.2% in March, and 11.4% in February. The Labor Department has been publishing survey data on U.S. airline cargo prices since 1990 and never before have we seen a string of numbers like these. Our outlook calls for air freight prices to increase 10% in 2008 and 4.2% in 2009—up from the more sedate 6.6% and 0.7% price hikes forecasted three months ago.

Despite last month’s hint of optimism, U.S.-based companies that move cargo over water remain in the thick of the inflation battle. In April 2008, the Labor Department’s water transportation price index increased 1.1% from a month ago and 9.6% from the same month a year ago. Coastal and intercoastal towing companies led the way with a 31.6% year-ago price hike. Excluding towing, freight transportation companies who operate on inland waterways and the Great Lakes-St. Lawrence seaway also pushed respective year-ago price jumps of 22.7% and 19%. Our forecast has been revised upward with water transportation industry prices now predicted to increase 7.5% in 2008 and 3.3% in 2009.

Railroads have been aggressive promoters of price increases since 2005, so the inflationary fever of the past few months may feel familiar. In April 2008, railroads surveyed by the U.S. Labor Department indicated they had hiked intermodal and carload prices by 4.5% and 0.1%, respectively, from a month ago. Compared to year-ago April 2007 price levels, we see intermodal up 18.3% and carload up 12.1%. This high inflation trend has been chugging along for seven months now so our forecast remains on track. Our outlook calls for rail transportation prices to increase 11% in 2008 and 4.3% in 2009. Three months ago, we had predicted gains of 8.6% and 3.7%.