Page 102 - 2018 Hotel Cost Estimating Guide

FREIGHT AND WAREHOUSE PRICING
Provided by Audit Logistics
VARIABLES
FUEL PRICES | Fuel prices are directly affected by the price of crude oil. Economic growth and consumption in the US, China, India, and Europe remains flat. In OPEC and non-OPEC countries oil production is outpacing demand. In November 2016, these countries reached an agreement to cut production by 1.8M barrels per day. If OPEC and non-OPEC countries comply with the agreement, oil prices could go over $60 a barrel and prices could rise. The election of Donald Trump to President in 2017 and his “oil-friendly” cabinet appointments will also affect oil prices. Prices will be higher in 2017 than 2016. If the current administration delivers on its promises of lower taxes and more jobs, the result will be an increase in demand and prices. Industry experts anticipate prices to rise 32 – 36 cents per gallon from 2016.
ALTERNATIVE PORT CONSIDERATIONS TO SAVE MONEY AND MITIGATE RISK | FF&E sourced from Asia for projects in the NW corridor, Gulf region, or East coast should include lead time for shipping product to the closet port of entry from the hotel.
For Gulf and East coast, additional 10-14 days should be added for goods to travel through the Panama Canal. For NW corridor, an additional 2-3 days should be added. Cost savings could be up to 30%. Routing FF&E through various ports in the US not only saves money, but mitigates risk of delay with regards to port strikes. Port workers on the west coast operate out of a different union than those on the east coast. In the event of a contract dispute, freight can be diverted to other ports to prevent delivery from being affected. The transportation industry anticipates that labor issues will continue to be a challenge in the future not only in the US, but in other countries abroad.
PERSONAL INJURY LAWSUITS | A large majority of trucking companies on the road today have an unsatisfactory rating with the DOT. Hoteliers should work with logistics companies that vet the trucking companies to meet minimum safety requirements so if a truck carrying FF&E for their hotel is involved in one of these accidents, their risk is mitigated for negligent hiring. In recent cases that exceed 25M in damages, the trucking company, logistics company, and the owner of the goods on the truck are who the attorneys are targeting all over the US.
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JN+A and HVS DESIGN | HOTEL COST ESTIMATING GUIDE 2018