April 2001
Piece by Piece

As economic expansion drives up drayage expenses,general service contractors and show managers put together solutions to control exhibitor costs

By Martha Collins

This year, for the first time, The Super Show® — one of the largest sports product and apparel trade shows in the world, with more than 2,500 exhibitors and 80,000 attendees — used flat rate package pricing for drayage, charging exhibitors based on their number of booths rather than by weight or number of pieces. 

The package price included all movement of freight to and from the dock; removal, storage and return of crates and skids; and reloading of outbound shipments. There were none of the usual extra charges for other services, such as not using the preferred carrier or handling small package deliveries or unloading privately owned vehicles. For exhibitors with three or more 10- by 10-foot booths, the price was $429 per booth. For those with two booths, it was $338 per booth. And for those with just one booth it was $169.

The driving force behind the package pricing: Exhibitor dissatisfaction with drayage pricing. 
“We survey our exhibitors every year, and the thing they complain about most is drayage costs. The question is always: ‘Why does it cost as much or 

more to move a shipment from the dock to the booth and back again as it does to move the shipment all the way from New York to Las Vegas?’” says Hardy Katz, Show Director of The Super Show and Vice President of Communications and Show Management, Inc. (CSM), North Miami, FL, which produces the show owned by The Sporting Goods Manufacturers Association (SGMA). 

The classic answer from general service contractors (GSCs) is that there’s more “handling” in material handling than there is in shipping. Labor and equipment are expensive, so drayage is expensive. 
These days the equation is more complicated. 

Shows are bigger. Turnaround times are tighter. Convention center expansions are putting the squeeze on land previously available for marshalling yards and storage. And a boom in construction limits the availability of heavy equipment in major cities. All of which leaves GSCs dealing with the added expense of building warehouses and marshalling yards, and going further afield to rent equipment.
The challenge for GSCs is to provide enough space, labor and equipment to meet the drayage needs of ever-larger shows at ever-larger facilities, while at the same time working with show managers to develop pricing plans that offer exhibitors the best value. 

Buying room to move
One of the biggest new expenses, say GSCs, is the cost of buying land in major cities where it comes at a premium price.

“In the past, trucks could either be staged along the convention center dock area or an adjacent street. Now, there are so many trucks and so little adjoining space that separate areas of land must be purchased or leased by the contractor,” says Barry Rappaport, Vice President, Western Region, The Freeman Cos., Dallas.

Freeman, for one, has had to purchase or lease land in more than nine cities. At the most recent COMDEX show, for example, they leased 35 acres to accommodate 650 40-foot trailers storing empty crates and 547 over-the-road tractor trailers coming to pick up freight. 

Dock to booth
With the conventional way of handling freight, the truck pulls up to the loading dock, the freight is unloaded, weighed and taken to a staging area. Then, it’s taken back to the dock to be loaded onto a trailer outbound for the show site, where it’s unloaded and delivered to the booth. GSCs are continually looking for ways to shorten or omit some of these steps to handle today’s increased freight volume more efficiently. 

Cross-docks are one solution. “The cross-dock is a 60-foot-wide ‘finger dock’ that extends outward about 100 feet. In-bound trucks line up on one side of the dock and outbound trailers on the other side. It’s more efficient in that we unload the shipment with a forklift, scales on the forklift report the weight to a computer on the dock and the forklift moves across the dock to load the material onto an outbound trailer,” explains Rappaport.

But while cross-docks save time, they are also a major added expense. The new cross-dock facility and marshalling yard Freeman is building in Las Vegas, for example, will cost approximately $10 million, and the company has also recently invested in cross-dock facilities in other major convention cities, including Chicago, New Orleans and Houston. 

From near and far 
While most GSCs have a lot invested in equipment, they always need to rent more to cover peak times and concurrent shows, and the proliferation of mega-shows is adding to those equipment needs. At the same time, the boom in local construction limits the supply of cranes, forklifts, flatbed trucks and other equipment available for rental, even in major cities like Chicago. 

“We bring in equipment from locations within a 400- to 500-mile radius of Chicago, and labor from as far as 40 miles away,” says Daniel Hoffend Jr., President of Rochester, NY-based Hoffend Xposition. “For the International Manufacturing Technology Show (IMTS), for example, we had 65 million pounds of machinery and exhibits. That would tax any city’s maximum of labor and equipment. There are more mega-shows these days, and many other shows have grown dramatically, so we’re seeing the impact of all this growth. Every city has this problem with one or more large shows.” 

Going such distances for equipment means shipping costs, as well as rental fees are added to GSC’s bottom lines.

A super package plan
“My idea was to create a flat rate so that an exhibitor knew exactly what the cost was going to be coming in and had no extra charges. With this plan, whether you’re a big exhibitor or a small exhibitor, all you have to do is multiply the drayage rate by the number of 10- by 10-foot booths and you know your total cost. There are no hidden or extra fees, even if the shipment comes in late or on overtime. The drayage package was mandatory, so it was used by 100 percent of exhibitors, and fees were paid in advance,” says Katz of The Super Show.

Joel Karlik, Director of Show Services for Franklin Sports Inc., Stoughton, MA, an exhibitor with one 6,000-square-foot booth, says his total costs were $7 per square foot less than at other trade shows where he exhibits. “With a booth our size, there can be a lot of overtime, but with the package plan we saved money because the price was set,” he says.

“The package price on drayage saved us a lot of money,” says Molly Wallace, Communications Manager for Chicago-based Wilson Sporting Goods, an exhibitor with 14,600 square feet of booth space. “The biggest advantage is paying one price and not being limited in the number of deliveries coming to your booth. We had truckloads coming from eight locations, and we received deliveries throughout the five-day set up.”

While show management reports that most exhibitors were pleased with the package pricing, one size inevitably did not fit all because of differences in the type and amount of materials involved. 

“We did have to tweak the package for some exhibitors,” explains Michael P. Hogan Sr., CEO, Show Biz USA, Arlington, Heights, IL, the show’s exclusive contractor for drayage. “For example, an exhibitor of ping pong tables had 60 booths, but not much weight, and an exhibitor with a 10- by 10-foot booth had just keychains, so the package price didn’t offer either of them any savings over traditional drayage prices. We made adjustments on a case-by-case basis. All exhibitors paid the package price, then for a few we did trade outs, gave them free advertising or warehouse storage.” 

Irving, TX-based The Expo Group was the show’s exclusive contractor for decorating. 

“This is the first show we’ve ever done where we did just the decorating and not the drayage,” says Fred Stone, National Business Director. Since drayage is traditionally a major revenue source for GSCs, the challenge was to keep the decorating costs down and still make a profit. “One thing that helped was that show management was responsible for their own decorating charges. Drayage can often be a catch-all for other charges but, in this case, SGMA and CSM paid for their own decorating. They did not pass these costs along to exhibitors.”

Both Show Biz USA and The Expo Group have three-year contracts with The Super Show. While there may be some minor tweaking of the operational details, it’s too soon to say what those might be and, overall, package pricing was a success, says Katz.

Finding a package that fits
While The Super Show’s package pricing for drayage represents an industry milestone because of the sheer size of the show and the fact that it was mandatory for all exhibitors and decorating was handled separately, it’s by no means the first show to use package pricing. 

Hoffend Xposition has offered show managers package plans as a cost-saving strategy since 1987. Each plan is tailored to the needs of the show. Either the exhibitor pays the contractor directly for unlimited amounts of certain services, such as drayage, based on square feet per booth; or expenses are covered in the initial cost of the booth space and are paid to show management. Either way, a variety of services can be included in the package price, and exhibitors know up front what their costs will be, explains Hoffend. 

“There’s less guesswork for us, and we’re able to be more efficient in our budgeting and planning. The efficiencies are great enough that while the gross revenue for drayage may be less with a package plan, the net can be the same or better,” Hoffend says. “We have experience with both package and traditional plans at the same show, as well as shows that use only package plans. More than 50 percent of our total yearly revenue comes from package plans.”

Hoffend builds a package plan based on the show’s history, including analyzing the total amount of freight, as well as how much typically comes in on time, late and on overtime. This data is factored into a formula for the show as a whole.

“Many exhibitors can save from 7 to 10 percent using a package plan. Others pay as much as 5 percent more than they may have paid in the past, but they choose the package plan with the guaranteed price, rather than take a chance that their truck will come in late or on the wrong day or on overtime,” he says.

For IMTS 2000, Hoffend offered 10 categories of package plans based on booth size and amount of material. “There were drayage packages, rigging packages, exhibit rental packages, decorating packages and a couple of mega-packages that covered everything. Exhibitors with very little freight could opt for a decorating package that included drayage,” he says. In 1997, IMTS exhibitors covering 19 percent of the show floor utilized the package plans; by 2000, that number had grown to 45 percent. 
“We have a form exhibitors can use to figure which method will be most cost-effective for them. In general, larger exhibitors are more likely to use the package plans,” says Hoffend. “The best scenario for exhibitors is to have a choice.”

Martha Collins, a freelance writer and editor based in Austin, TX, is a frequent EXPO contributor. She’s covered the exhibition, convention and meeting industries since 1993.