Source: Thinking Cap Solutions. (360) 452-6159. E-mail: thinkcap@olypen.com

The aggregate price index for all trucking and road courier services climbed 0.5% between January and February 2001. But an in-depth look at price trends for the LTL carriers alone shows a far different picture: Average LTL prices fell 0.5% in February, which was the third consecutive decline in as many months. At this rate, average LTL prices will be up only 6.6% from year-ago levels in the first quarter of 2001—a significant slowdown from the 9.5% year-ago price hike LTL carriers recorded in 2000's final quarter. LTL rates will continue to soften through the summer.

Shippers that rely on water transportation continue to face some serious inflation challenges. In February 2001, average prices for deep-sea foreign transportation of freight jumped 7.3% from January 2001 levels and 24.9% from February 2000 levels. Likewise, rates charged by Mississippi River carriers rose 1.7% over the previous month and 10.4% over February 2000 levels. Shippers also encountered inflation in marine cargo-handling services. Compared with year-ago levels, the average price for stevedoring containers is up 6.1% and wharfage fees are up 8.4%.

Average prices for U.S. linehaul services fell 0.3% between January and February 2001. That decline, which exactly offset the 0.3% price hike the industry managed to push through in January, also registered as the largest one-month price drop since January 1999. Because of weak demand, in fact, rail rates for shipping everything from cars to coal declined during this period with a few exceptions: Average prices for rail intermodal service rose 0.3%, rates for shipping food products rose 1.2%, and rates for shipping paper-related products held steady.

Shippers, fasten your seatbelts! After falling for three consecutive months between November 2000 and January 2001, average prices for aircargo service appear to be heading back up. In February 2001, scheduled aircargo flights saw a 0.4% average price hike from January levels. That increase may seem minor, but at a time when the air courier labor market is coping with the shift in U.S. mail service to Federal Express, any price hikes for aircargo service may be cause for concern. Meanwhile, all remained quiet between January and February in the air courier market as average prices held steady.

Warehousing

As the economy cools down, prices for public warehousing should be cooling down too. At least, that's the theory. In fact, average prices for public warehousing in February 2001 rose 2.1% from year-ago levels. Prices for storing farm products grew the fastest, up 3.5% from year-ago levels in February 2001. One reason for the rise may be the uptick in labor costs: In 2000, average hourly wages for warehouse workers increased 4.7%, reaching $12.49 per hour by January 2001.

Freight Forwarding

Freight forwarders' average rates increased 1.5% in 2000, after a 0.6% hike in 1999 and three previous years of price rollbacks. However, forwarders won't have much of a chance to make new price hikes stick now that the economy is slowing. Unfortunately for forwarders, industry costs continue to rise. After holding steady at around $14.80 an hour last year, average hourly wages for industry workers increased to $15.13 in January 2001.