May 2005
Best Practices: No money down

E.J. Krause covers drayage fees at Expo Manufactura, increasing attendance and space rentals

By Julie Ritzer Ross

As is the case almost everywhere, there’s no free lunch at Expo Manufactura, one of Mexico’s largest metalworking/manufacturing exhibitions. However, equipment vendors booking space there do get something for nothing, in the form of free drayage.

Show manager E.J. Krause de Mexico introduced this perk at Expo Manufactura 2004, helping to spark a 13 percent increase in show attendance in 2004 over 2003 and a 5 percent increase in show attendance in 2005 over 2004 (from 4,550 delegates in 2003 to 5,145 delegates in 2004 and 5,400 delegates in 2005). Exhibit space rentals rose from 17,050 square feet in 2003, to 17,630 square feet in 2004 and 20,193 square feet in 2005.

Held each February at the CinterMex Exposition Hall in Monterrey, Mexico, Expo Manufactura had, since its inception in the mid-1990s, attracted attendees from top companies throughout Mexico’s manufacturing sector, says Jose Navarro, Director, Industrial Shows for E.J. Krause de Mexico. But in 2001, a sluggish economy and subsequent difficulties in paying drayage fees began forcing manufacturers to bring fewer pieces of major equipment to the show than in the past. This caused a decline not only in exhibit space, but also in attendance because the dearth of large machinery made the event less appealing to its target audience, he says. E.J. Krause de Mexico deemed absorbing drayage expenditures the only means of reversing the trend and ensuring the long-term health of the show.

The company negotiated a flat drayage fee with its freight forwarder. As a bargaining chip, it agreed to pay a fixed amount for all drayage. This tactic helped to clinch the deal, Navarro says. So, too, did emphasizing during the negotiations that the flat fee would almost certainly exceed the sum of drayage fees remitted by individual exhibitors. The flat fee totaled $12,000 in 2004 and $8,000 in 2005; the fee for 2006 is now being negotiated.

“The true sticky point came in 2005, when we wanted to lower the flat fee,” says Navarro. To accomplish this goal, the company persuaded the freight forwarder to transport exhibitors’ machinery using appropriate lower-capacity equipment instead of the higher-capacity forklifts and other technology it had enlisted at Expo Manufactura 2004. E.J. Krause de Mexico also agreed that it would never reduce the flat fee below $8,000 and would remunerate the freight forwarder for the rental of special equipment used to transport exhibitor machinery shipments weighing more than eight tons.

The offer was publicized on the show’s Web site, as well as via telephone calls to exhibitor prospects and through brochures and letters sent to existing and potential exhibitors. It has paid off: In addition to increased attendance and exhibit space, the amount of big machinery visible on the show floor is on an uptick. In 2004, exhibitors brought in 241,185 pounds of freight; in 2005, they brought 284,706 pounds of freight, most of it big machinery. To cover the drayage costs, the company only had to sell four or five extra exhibit booths for a total of about $20,000. This year, it sold eight additional booths, for a return of more than $32,000, Navarro says.

While E.J. Krause de Mexico plans to pick up exhibitors’ drayage tabs for Expo Manufactura 2006, two minor changes to the program are in the works. Both stem from what Navarro deems the only operational issues created by the payment initiative.

To afford a necessary extra measure of control, each equipment manufacturer will be asked to sign a document acknowledging that although E.J. Krause de Mexico will assume its drayage expenditures, it will not be liable for any difficulties experienced in, or damages stemming from, the transportation of machinery from the loading dock to individual exhibit booths.

Beginning in 2006, the company will also limit drayage charges covered to a yet-to-be determined number of pounds per exhibitor. “We believe an allowance is fair, and that any difference exhibitors must handle on their own will not (dissuade) them from attending the event,” Navarro says.