Global Freight Costs Settle as Lumber Prices Rise

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published 14 August 2023

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The near-term outlook for freight shipping costs: mixed. For trucking, expect a 5%-10% increase in medium-distance rates, due to the bankruptcy of venerable Yellow Trucking, the fifth-largest firm in the less-than-truckload sector. The loss of that capacity figures to halt and even reverse the recent slide in rates. Dry-van rates are off 22% vs a year ago. Flatbed rates: down 8% in the past two months.

Air cargo costs should come down soon, due to declining cargo volumes, now that ocean shipping bottlenecks have mostly eased. The cost of shipping by air from Europe to the U.S. is already back to pre-pandemic levels. China-to-U.S. rates are still a third above the pre-pandemic level, due to some expensive contracts that were signed during the peak of the air shipping boom. Those will expire shortly.

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Watch out for a jump in lumber prices. The bad wildfire season in Canada, which supplies 80% of U.S. lumber imports, has burned 9.2 million hectares of forest, with another couple of months to go before cooler and wetter weather ends the danger.

Lumber prices are down recently due to softer home-building activity in early summer. But with inventories of existing homes for sale so thin, construction should pick up. The combination of rising demand and reduced supply could up lumber prices by 20%.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.