Transportation pricing trends - December 2011

Trucking
      In October, prices for trucking services increased 0.2%. A sharp 1.2% price hike in long distance LTL trucking was the main inflation driver. On a year-over-year basis, overall trucking rates increased 5.5% and are rising at an accelerating pace. The trend toward stronger inflation has widespread support across all major load types and distance categories. Thanks to fast-rising diesel fuel prices, aggressive pricing on the part of truckers has a solid cost-based justification. The good news for logistics managers: Projections show the pace of trucking rate escalation peaking in Q4 2011. Trucking rates are forecast to retreat 0.80% in 2012 before regaining strength and rising 1.40% in 2013.
     
     
     

Air
      Average prices for all air transportation services jumped 2.1% in October as providers recouped a portion of September’s 4.5% tumble. Buyers of nonscheduled freight services on domestic flights bore the brunt of inflation’s wrath, facing a rate hike of 7.8%. That may seem harsh, but prices for chartered airfreight in the U.S. actually were up only 1.1% compared to October 2010. Air carriers continue to face strong profitability headwinds. Our economic tracking model shows U.S. airliner costs increased by 1.44% for each 1% increase in airliner industry prices. We forecast cost pressures to begin easing by Q2 2012. Prices for scheduled air freight services will respond by falling 4.3% in 2012 and then edge up 0.5% in 2013.
     
     
     

Water
      The U.S.-based water transportation industry reported an average price decline of 0.7% in October 2011. This decline had mixed support across specific product offerings. Buyer inflation experiences ranged from a 1.9% hike for inland freight services (excluding towing) to a 2.5% dive in deep sea rates. A broader look at industry trends shows water transportation rates increased at a year-over-year rate of 7.8%, slowing from 8.5% in September. Shippers can expect industry prices to fall through Q1 2012 and perhaps the early part of Q2. Projections show industry prices down 3.3% in 2012. A pickup in economic growth will turn prices around in 2013, pushing them higher by an average of 2.2%.
     
     
     

Rail
      Lackluster economic conditions continued to put downward pressure on rail operators in October. Overall, rates edged lower by another 0.1%. Rates for intermodal service were especially soft, slipping 0.4%. Carload rail rates also dropped 0.2%. Despite easing inflation pressures, shippers still faced significant budget challenges. Rail rates stand 9.3% higher than October 2010 and are chugging along at a year-over-year 8.1% pace. Our forecast: Rates are expected to trend higher at an accelerating pace into the beginning of 2012. Slow growth will erode current price levels throughout much of the spring and summer leaving 2012 rates 1.7% below 2011 rates. Rates will rise 1.5% in 2013 as the economy gains steam.