Trucking costs forecast to increase

| Thursday, April 24, 2003

Rules of supply and demand will boost trucking costs as summer approaches, KiplingerForecasts.com reports.

For this reason, businesses that ship via truck should now lock in freight rates.

“Prices will climb by an average 4 percent this year – about twice the hike in 2002 – but rate increases will be only about 2 percent to 3 percent on contracts signed in the first half and closer to 6 percent after mid-year,” Kiplinger reported.

That’s because later this year, an improving economy will prompt rising demand in truck shipping, which will encounter a “capacity crunch.”

Further, analysts say trucking company failures since 1999 have reduced the number of rigs on the road, while companies still in business have not bought new trucks, partly because of concern about the reliability of new low-emission diesel engines.

Meanwhile, freight rates on LTL contracts should follow the same pricing pattern as full-load contracts, Kiplinger reports. The exception would be in the Southeast and Midwest, where LTL carriers are seeking 5 percent to 10 percent rate increases in anticipation of rebounding business demand in those regions.

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