Death, Taxes, and Freight Costs!
July 02, 2019
Ways to Control Freight Costs
“The only certainties in life are death and taxes.” When Benjamin Franklin famously quoted this, trade show freight costs weren’t an issue or he surely would’ve included them.
Perhaps you’ve noticed that freight costs are rising. If you haven’t, you soon will. And not just by a small increment, either. Freight costs have been significantly rising in recent years, and the trend looks to continue. As of early 2019, the freight market was seeing record high prices and there seems to be no immediate relief in sight.There are many contributing factors to the rising costs of freight. In fact, there are so many that it would be hard to pinpoint a single cause in price increase. More likely, the combination or “perfect storm” of factors are working together to create more need, greater demand, and higher prices.
INCREASED SPENDING: One glance at current economic data shows that consumer spending is up. In fact, the 2018 holiday season experienced a 5% increase in consumer sales. That might not seem like much, but spending had already been rising every year prior to that.
INCREASED PRODUCTION: More spending and buying means more production is necessary. This past year, the U.S. reached a 13-year high on manufacturing. Additionally, although the statistics vary, some research reports that factories received record numbers of orders this past December, significantly more than they have in any one year since 2004. More manufacturing means there’s more demand, and all that “stuff” has to go somewhere.
INSUFFICIENT CAPACITY: Whether it’s being exported or shipped across the country, whether it’s going to distribution centers or homes and offices, it all has to be shipped, and it all takes up capacity. Shipping capacity was already at a near max before the most recent boom of manufacturing entered the equation. The job of the shipping industry demands that capacity almost always be met in order to save time, space, and money. Empty cargo holds are lost money. Extra trips are lost money. Slow delivery means lost money. So the shipping industry tries to match the exact need (i.e., space, weight, etc.) to its cargo.
INSUFFICIENT WORK FORCE: So just expand the cargo load, right? Do more deliveries, right? Hire more drivers, right? Wrong. One ongoing concern facing the shipping business is the driver shortage, which has been a problem for several years. According to the American Trucking Association, the shortage is reaching crisis level because of an all-time low in drivers and trucks. The ATA estimates that last year alone it had a shortage of 50,000 drivers.
INCREASED REGULATIONS: So just have the existing drivers drive more, drive longer hours, drive bigger trips. Wrong again. Carriers are now governed by restricted hours and the ELD mandate. In its simplest form, an electronic logging device — or ELD — is used to electronically record a driver’s Record of Duty Status (RODS), which replaces the paper logbook some drivers currently use to record their compliance with Hours of Service (HOS) requirements. The ELD itself tracks a driver’s HOS, synchronizes with the truck’s engine to capture drive segments, and cannot be overridden. That means no fudging on the miles/hours driven by any one driver. Fewer drivers plus a shortage of trucks simply equals higher shipping rates.
UNPREDICTABLE DETERRENTS: Besides the obvious factors – drivers, trucks, etc. – there are some huge problems that are outside of anyone’s control. WEATHER. Hurricanes, snow storms, wild fires, floods, and other natural disasters present a problem to carriers and shippers. Forces of nature can significantly impact how quickly a shipment gets processed, loaded, and delivered. And while there’s always been weather to contend with, recent years have been especially challenged with greater, more frequent weather events.
The effect of all of these factors is higher freight costs. In one year alone, freight costs have as much as doubled in some areas. A Texas citrus grower told The Produce News that he’d never seen such high shipping costs and such a shortage of shipping in his two decades of farming. What cost him $2,700 to ship last year cost him $5,500 this year.
WHAT TO DO
While it might seem like a lost cause, making you want to throw your hands up over the whole thing, there are some simple steps you can take to mitigate the increasing cost of freight related to your trade shows.
- Stop shipping marketing materials. Boxes and boxes of promotional, information pamphlets, booklets, and flyers are heavy and cumbersome and expensive. It’s just as effective to distribute them electronically.
- Stop shipping every product you sell in your booth. Heavy, bulky products can be marketed another way. Perhaps a smart graphic design or an interactive areas of your booth could tell the product story.
- Stop thinking more is more. I’m not necessarily saying less is more or that you need to go minimalist. However, when thinking about the actual structure of your exhibit, keep the freight in mind. Be smart and creative when making design decisions. When trying to decide what you really want and actually need, keep shipping in mind. Some elements will be worth spending the money on, and some won’t.
Because Skyline has both a focused mission and extensive design experience, we have loads of options to ease the pain of freight costs from a design and technology perspective. By designing custom exhibits with highly engineered exhibit display systems that are lightweight and made to pack down tight and light, you can reduce the size, weight, and number of crates you need to ship to and from the show.
This article was inspired by "Trade Show Freight Costs Are Rising. This is Why." by Scott Young and first appeared at skyline.com