Although the economy is slowing down, average trucking rates haven't shown signs of slipping, at least according to Labor Department surveys. In the first quarter of 2001, average prices for trucking and ground courier service increased 4.5% from the same quarter a year ago. In March 2001, less-than-truckload carriers pushed prices up 5.0% from year-ago levels, while truckload carriers increased rates 2.5% over the same period. Our forecast for all trucking and courier rates shows a 4.0% hike in 2001 followed by a slower 2.6% gain in 2002.

After steaming ahead in 2000, rates for shipping freight by water may finally be experiencing a lull. Average prices for the inbound deep-sea foreign transportation of freight fell 2.0% between February and March 2001, outbound rates fell 2.6%, and Mississippi River rates dropped 0.2%. Nonetheless, because of earlier price hikes, average prices for shipping freight via ocean carriers remain at a high-water mark. The U.S. price index for all water transportation service indicates that shipping over water costs 26.8% more today than it did in December 1992.

Average prices for shipping containers on flatcars did not change in March 2001, but non-intermodal rail rates rose 0.4% from February prices and 2.1% from year-ago levels. Overall, average rail rates increased 1.7% from year-ago levels in 2001's first quarter. That's about on par with the 1.8% year-ago hike we saw in 2000's final quarter and the 1.7% year-ago gain expected in the second quarter of 2001. Our forecast for the next two years has been revised upward: We expect average linehaul prices to increase 1.4% in 2001, followed by a 0.7% hike in 2002.

Air traffic may be slow this coming summer season, but price hikes for air cargo and air courier services aren't slowing down. In March 2001, average prices for shipping cargo on scheduled airline flights rose 0.2% from February levels and 5.3% from year-ago levels. Domestic air courier rates rose 1.7% between March 2000 and March 2001, while international air courier rates increased 1.4% over the same period. Nonetheless, we have revised our forecast for scheduled aircargo rates down slightly. We now project average aircargo prices will fall 0.3% in 2001 before climbing again by 1.0% in 2002.

Trucks and Trailers

Trucking companies may be distressed by the high cost of fuel, but at least their capital investment costs remain low. Data for March 2001 show that average prices for very large truck trailers and chassis (33,001 pounds per axle and over) fell 0.4% from year-ago levels; prices for trailers under 10,000 pounds per axle declined 1.5%; and prices for low-bed heavy haulers fell 4.5%. The only category experiencing inflation has been mid-sized trucks, tractors, and chassis.

Aircraft

In the 12 months ending with March 2001, average prices in the domestic aircraft industry increased 5.1%. The price hikes resulted from both an uptick in orders and from aircraft makers' rising costs. For example, in that period, manufacturers' direct production labor costs rose 5.9% and heat and power costs soared 15.9%. Orders for aircraft may be falling now, but inflationary pressures will keep the heat on aircraft makers ... and buyers.

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