Price Spike Having Little Effect

With U.S. fuel prices at their highest levels ever, you'd think exhibitors would be reeling from the cost of shipping and traveling. As of late March, the average diesel price was $1.62 per gallon, according to the American Moving and Storage Assn., and the average for a gallon of self-serve regular was a record $1.74, according to the American Automobile Assn.

Despite that, exhibitors and exhibit transporters both are surprisingly low-key about the impact of skyrocketing fuel costs.

Michael Bandy, president of the Trade Show Exhibitors Assn., said he hadn't heard from anyone — exhibitor or supplier — regarding high fuel prices. "That doesn't mean that it isn't having an impact, but it hasn't come on the radar screen," he said.

That's partly because competition limits how much carriers can add to freight bills to recoup the cost of fuel prices for themselves. For ground shipments, the surcharge currently stands at around 5 percent of a shipment's total cost.

A typical charge for a cross-country exhibit shipment is $1,100 to $1,400, said Stephen Roe, sales and marketing manager for Bekins Worldwide Movers, making the fuel surcharge to exhibitors on such a shipment $55 to $70.

And while there's no maximum, carriers will remove their fuel surcharges once the diesel fuel prices fall below an acceptable level independently determined by each carrier, said Mike Rosso, director of transportation for Freeman Decorating. For example, Roadway Express's surcharge ceases to apply when the U.S. national average cost for diesel fuel falls below $1.10 a gallon.

Most carriers say they base the surcharge on the U.S. Dept. of Energy's Fuel Price Index, which lists the national average fuel price and is updated and posted online every Monday. But, Roe said, some exhibit transportation companies might choose not to bump up the surcharge limit, or to waive it entirely.

Roe emphasized that for both carriers and drivers, all the fuel surcharge does is recoup the higher price of fuel. "We aren't making more money, we're just losing less," he said.

Like ground transporters, airlines also use fuel surcharges. Currently, that surcharge stands at about 10 percent domestically, and is calculated using the U.S. Dept. of Energy's Fuel Price Index. For international air shipments, the surcharge is based on the rate per kilo, according to Jay Cease, TWI Group director of operations.

Stephen J. Barry, chairman of TWI, which arranges air freight for U.S. exhibitors headed to foreign shows, said another reason fuel cost increases haven't caused much trouble is that shipping rates involve much more than just fuel prices. Yes, freight rates are adjusted when there's a major change in fuel prices, and they are currently up for just that reason - but not anywhere close to an all-time high.

Airlines are reluctant to raise their freight rates too drastically, said Barry. Instead, they look at the bigger picture, and "don't want to gouge and lose a client in the long term," Barry said. Plus, long-term contracts limit airlines' ability to raise rates drastically in the short term.

It's the independent truck drivers who you'd expect to feel the financial impact of the high fuel costs the most. Roe said one way that truck drivers can mitigate their pain is to reduce speeds to increase their mileage per gallon. But even owner-operators don't seem to be complaining much about the surcharge, said Wayne Schooling, president of the NorthAmerican Transportation Assn.

Jim Lewis, owner of Exhibition Logistics, said his company held off imposing a surcharge as long as it could, but finally was forced to begin adding 5 percent in mid-March. So far, there have been no complaints from customers.

Greg Risner, director of exhibit services for Roadway Express, said he's had no negative comments from exhibitors because of the fuel surcharge and hasn't seen any drop-off in exhibit shipping as a result – yet. It's still early in the fuel crisis, he said, and although prices usually drop quickly after such a spike, if high prices persist, the impact could be great.

Bob Thomas, president of Exhibit and Event Management, said exhibitors realize that the charge is not substantial, and that there's not much they can do about it. "I've never heard an exhibitor complain about it – and I never have either."

In any case, said Roe, exhibitors typically only spend 8 to 15 percent of their budgets on shipping. "It costs more to get the booth from the dock to the exhibit space than it does to ship it to the convention center," he said.