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INDUSTRY PULSE: U.S. shippers expect to continue paying higher rates in 2005

BOSTON, Mass. -- U.S. shippers are paying significantly higher freight rates and facing inadequate capacity with li...

BOSTON, Mass. — U.S. shippers are paying significantly higher freight rates and facing inadequate capacity with little hope for improvement next year, according to a survey conducted in November.

Eighty two per cent of shippers reported freight rate increases during the fourth quarter while half of shippers responding the survey, conducted by Logistics Management magazine, said they experienced less availability of freight services during the fall quarter.

Are shippers in Canada facing similar circumstances? Truck News and Motortruck’s sister publication, Canadian Transportation & Logistics, has partnered with the Canadian Industrial Transportation Association (CITT) and the Canadian Institute of Traffic and Transportation (CITT) to provide definitive answers to rate increase, capacity and other key questions. Results from the first Annual Canadian Transportation Buying Trends Survey are expected to be out by the end of January.

Preliminary results from the first Annual Canadian Transportation Buying Trends Survey indicate that 77% of shippers are paying higher rates for truck transportation this year while 63% are paying higher courier rates, 59% are paying higher rail rates, 61% are paying higher marine rates and 59% are paying higher air freight rates.

In the U.S., the Logistics Management survey found that shippers expect freight rates across all modes to average about 4.5% more in 2005 than in 2004.

The U.S. survey results are consistent with steep price increases for freight services reported for October and November in the Producer Price Index. According to the monthly survey of sellers by the Bureau of Labor Statistics Freight, rates overall increased about 1% in November. Air freight rates were up 1.3%, LTL rates rose 1.2% and TL rates increased 1%. Both intermodal and express/ parcel rates were 0.6% higher. These marked the most significant monthly increases for most modes since freight rates began to soar in the US last May.

The future direction of the current capacity crunch is not as clear. Thirty per cent of shippers responding to the survey expected the situation to worsen while 31% expected improved availability of capacity by the first quarter of 2005.

Any improvement in capacity, however, will require substantial investment, the study’s authors note. More than 50% of shippers expect better business conditions in the next quarter.

The first annual Canadian Transportation Buying Trends Survey also polled shippers on their expectations for next year. Early results indicate that 68% experienced higher freight volumes in 2004 and the same percentage expect to boost their shipment volumes next year. Many indicate concern over capacity, particularly in land transportation. Forty seven per cent are concerned about trucking capacity while 53% are concerned about capacity in the rail sector.

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Truck News

Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry.
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