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

After 13-consecutive monthly increases, the U.S. trucking industry, overall, reported a 0.6% decline in average transaction prices, including fuel surcharges. Long-distance LTL haulers of general freight led the way with a 1.9% price cut, but long-distance haulers of specialized freight also dropped their tags 1.9%. Even with industrial demand faltering and exports slowing, our forecast model calls for the inflation trend in LTL tags to peak in the first quarter of 2009. LTL prices are forecast to be up 9% in 2008 and 6% in 2009. In the long-distance truckload market, average prices increased 0.2% from July to August. Average annual TL prices are forecast to be up 6.8% in 2008 and 4.8% in 2009.

The air freight industry’s inflation trend already had been flying higher than ever before, but August’s 12% monthly price hike for flying cargo on scheduled airlines took this price chart into stratospheres never before charted. Our forecast last month called for scheduled air freight tags to end 2008 with a whopping 14% annual price hike, but we’ve been forced to revise that forecast to 16%. With inflation trends outside of historical benchmarks, our forecast confidence is a bit shaky to say the least. Nonetheless, we forecast scheduled air freight prices to increase another 6.3% in 2009. Domestic wholesale prices for jet fuel sold by refiners plunged 23.2% in August, thank goodness.

The big news in the water transportation sector is now coming from the deep sea freight transport sector. In August, deep sea freight tags increased 6.6% from a month ago and 20.2% from the same month a year ago. Inflation trends in the deep sea market had been relatively tranquil, at least compared to the rate explosion seen on inland waterways. But all that changed in the second quarter of 2008 when deep sea prices increased 8.2% above year-ago rates. In the third quarter, it appears deep sea prices will be up 17.9% from a year ago. Deep sea transport’s inflationary burst has caused us to raise our aggregate water transportation price forecast to 12% in 2008 and 10% in 2009.

The forecasting chore for rail industry prices has finally settled into a somewhat more predictable pattern, although that pattern bodes more pain ahead for shippers negotiating contracts. The annual rate of growth in inflation for rail service bottomed out in the third quarter of 2007 at 3% and has been accelerating at an increasing rate. Our forecast calls for that inflation rate to peak at 12.8% by the end of 2008 before slowing to 7.4% in 2009. August data for rail service confirmed the inflationary trajectory as carload prices were up 1.2% from a month ago and 14.2% from August 2007. At the same time, intermodal tags dropped 0.2% from a month ago, but were up 18.5% from a year ago.