Shippers that rely on less-than-truckload (LTL) intercity service felt the sting of higher prices this past May. According to surveys from the Department of Labor, average LTL prices increased 0.4% from April rates and 5.5% from May 2000 levels. Truckload rates, meanwhile, increased just 0.1% and 1.7%, respectively, over the same time periods. Shippers that leased trucks with drivers also had a bumpy ride. In May, average prices were up a strong 12.3% from year-ago levels. After rising 4.1% in 2000, all truck rates are forecast to rise 3.9% in 2001.

Average prices for shipping freight over water fell for the third month in a row in May 2001. According to Bureau of Labor Statistics surveys of U.S.-owned carriers, water transportation rates fell 0.2% from the previous month's levels. Looking at trends, we see that prices rose only 1.5% from the same time period a year ago. Indeed, in the entire 12-month period ending with May 2001, average rates for the water transportation of freight were up 7.0%, a significant slowdown from the 9.4% inflation rate recorded during the previous 12-month period.

Regulators may have lifted the moratorium on railroad mergers, but no moratorium on freight rate inflation has been declared. In May 2001, average linehaul operating rates increased by 0.2%. Looking at just freight rates, we note that prices for hauling containers actually dropped 0.1% from April levels, although they rose 0.7% from May 2000 levels. Non-intermodal freight rates also increased in May, up 0.3% from April figures and up 1.5% from year-ago levels. Our outlook calls for linehaul operating rates to rise 1.1% in 2001 and 0.7% in 2002.

Savvy shippers know that what goes down one month often goes up the next. Such was the case in April and May for companies shipping freight on scheduled aircargo routes. In April, average aircargo rates dropped 4.9% from the previous month's levels. But then in May, prices soared 4.6%. Looking at aircargo rates between May 2001 and May 2000, we see rates are up a solid 3.9%. These price hikes call into question our earlier prediction that air transportation prices (for people and freight) would fall 5.7% from year-ago levels in the fourth quarter of 2001.

wood pallets

If you buy wood pallets and skids, be ready to pay higher prices. Average pallet prices have already risen 0.4% in the 12-month period ending with May 2001—a turnaround from the 0.08% price decline recorded the previous year. The hikes can be traced directly to higher manufacturing costs. For example, in May 2001 the price of softwood lumber soared 16.6% from April levels and 5.7% above year-earlier prices. Meanwhile, direct labor costs are up 5.0% from year-ago levels.

Corrugated boxes

U.S. box manufacturers have been enjoying excellent margin gains over the past three years, reports Thinking Cap Solutions. Indeed, for every $100 worth of boxes sold, the average box maker spent just $63.27 on direct manufacturing costs in May 2001. Industry prices (as of May) were still close to their record high. With demand expected to slow and paperboard costs forecast to fall, box buyers should push for lower prices over the next six months.