If you are making, buying or selling durable goods, you are involved in the volatile shipping world.  Judging by things I read, people I talk to and general observations, shippers are in for both good and bad news.  On the domestic front, costs are definitely going to continue increasing.  Higher demand, new regulations and higher equipment and labor costs will drive rates higher.  Some modes will be affected more than others.  Let’s review by mode and predict what will transpire in 2012 starting with the worst and finishing with some potential good news.

Truckload – If you use truckload carriers to move goods, you will be facing additional price hikes to tack onto the average 8% increase most shippers saw in 2011.  Trucking companies have been hesitant to add capacity after the 2008 recession and by controlling their fleets they can generate higher yields.  Of course, many can’t add enough qualified drivers anyway, so controlling capacity may be more about drivers than any other factor.  Tighter government regulations have limited qualified drivers and as the economy picks up, jobs where one can stay at home every night are more favorable than the gypsy lifestyle of a trucker.  Consequently, don’t be surprised if rates on average increase 5-8% for 2012.  The new hours of service won’t impact the industry much this year, but get ready for that in 2013.

Rail and Intermodal – If you are a rail shipper, I don’t have to tell you about increases you will be taking.  Just take the average you normally receive and expect the same.  If you are an intermodal shipper, expect those rates to escalate as demand for intermodal services has jumped double digits over the past year.  Rails continue to provide better, more reliable service and with the jump in demand, makes for a good case of higher rates.  However, given the dynamics from the truckload sector above, this segment of the market will only continue to grow, especially for longer hauls.

Small Package – No new entrants here so expect the same relative increases (5.9%-6.9%) per year as volume continues to escalate with the general growth of e-commerce.   I believe regional small package companies will continue to grow, but perhaps not seek the same level price increases especially with accessorial charges.

LTL – During the past year, LTL carriers have been successful in translating tighter market capacity into higher yields.  Most were successful in bumping their average revenue per hundred pounds by double digit percentage points, but needed to after hitting the bottom during the 2008 recession.  The big “IF” and it is a big one, is if YRC can stay in business.  They supposedly have enough cash to get them deep into the year.  Should the economy not continue to grow, YRC could face undue pressure and they do not have the staying power of the other national brands.  Absorbing YRC’s volume into the other carriers won’t be a significant challenge operationally for the other carriers, but will come at a price.  Expect 4-6% general rate increases (like always) and double that if YRC doesn’t survive.

Air – My sense is that air freight capacity is ample and that rates should remain mostly flat.  However, if inventory levels fall or remain flat, there is always the chance for expedited service needs and thus a tightening of capacity.  That leads to higher rates, but I would expect normal increases to be experienced.

Ocean – This might be the one bright spot.  There is ample steamship capacity in the marketplace and steamships are ordering record numbers of megaships, predicting that container traffic will double by 2020.  For those doing business in 2012, the capacity that is available yields bargain rates and there isn’t anything on the horizon that makes me think otherwise.

These forecasts are one person’s opinion based on reading reports, engaging carriers, shippers and others in the marketplace.  One thing is for certain, change is constant in the shipping world.