Subscribe to our free, weekly email newsletter!


Transportation pricing trends - December 2011

Pricing across the transportation modes

November 30, 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.

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The International Air Transport Association (IATA) announced August 2014 data for global air freight markets showing continued “robust”growth in air cargo volumes.

Even though some of its key metrics dropped sequentially from August to September, the outlook for manufacturing over all remains strong, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).

Company officials said that these planned changes, which will take effect on January 4, 2015, will provide for increases in current pay rates and reduce the time it takes for its nearly 15,000 drivers to reach top pay scale.

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA