While we all struggle to increase participation in meetings, tradeshow and special events, the issue of making exhibitor participation in trade shows more affordable has been making headlines…particularly here in Chicago.
The biggest complaint I generally hear from exhibitors is the cost of material handling, also known as drayage. It’s difficult for exhibitors to understand why it sometimes costs more to have their crates unloaded from a truck and moved to their booth, than it does to ship them across the country. There is more to material handling service charges than simply unloading the freight from a truck and moving it into an exhibitors booth (also included are removing the empty crates from the booth once they are unpacked, storing them, returning them at the close of the show, and then loading them out onto trucks). However, I believe the current trade show material handling cost model is broken and outdated.
Presently, the material handling cost to exhibitors from general service contractors (GSC) is based on a dollar amount charged per hundred pounds, or per CWT (which stands for cart weight). A CWT is a unit of weight measurement equal to exactly 100 pounds (a hundred weight), created and used by U.S. merchants since the late 1800s. Traditionally, this measurement is used by large common carriers in rating charges for freight. It is also used by GSCs in the trade show industry.
I suppose it’s easy to understand why the GSC community initially adopted from the trucking business the CWT measurement for exhibit freight. It was established and already in place, so GSCs (who came along long after trucking) found an easy unit of measure based on freight weight that they could bill from. But is trucking freight across the country, and GSC material handling for trade shows an apples-to-apples comparison of services?
I would argue they’re not. However, GSCs have been using this billing model since exhibitions began, and exhibitor revenue from material handling constitutes approximately 75% of the GSCs profit on a trade show. Knowing this, what can we do to restructure the costs and billing metric for material handling to make exhibitor participation more affordable? I suggest that event producers and general service contractors give serious consideration to the following.
- Change the general service contractor’s current metric of charging per hundred pounds (CWT.) for material handling to either a “per square foot”, or “time and materials” charge.
- Change the general service contractor’s current business model so as not to rely on material handling for up to 75% of their profit margin. This would require industry acceptance by event producers and all GSCs, because if we ask general service contractors to lower material handling pricing, they will then need to charge the event producer for other items which have not traditionally been billed to event producers (or perhaps billed at a deeply discounted rate), such as show management decorating, furnishings, graphics, carpeting, custom booths, shipping, etc., and also bill for GSC employee planning time, travel expenses and/or charge the event producer a “management fee.”
While I realize that charging for material handling based on square footage or time and materials (as opposed to weight) are not new ideas, I thought it might be interesting to outline a couple of examples to stimulate some ideas and input.
As you read on, please keep in mind that every show is different and there are a myriad of variables that can affect the general service contractor’s pricing, i.e., size of show, dates and location of show, type of show, etc. As I was putting the following examples together, I was imagining a tradeshow of approx. (400) booths held in Washington, DC. Let’s assume the show has approximately 250,000 lbs. of exhibitor freight, and if material handling rates were based on the traditional model of per CWT, the rate would be a flat (both warehouse and show site) $75 per hundred pounds. The examples aren’t perfect, but hopefully they will help us all think about possible options for lowering the cost to exhibitors.
Material handling pricing model based on square feet
A few footnotes regarding this model:
a) The cost per square foot would be negotiable between the general service contractor and the event producer, i.e., lower or higher depending upon labor costs in a particular city, size of show, dates and location, length of contract between event producer and GSC, etc.
b) To encourage exhibitors to purchase more exhibit space, the square footage pricing could be “tiered”, i.e., exhibitors with more space might receive a lower per square foot material handling price
c) The material handling costs can either be packaged into the event producer’s booth fee cost…or billed directly from the GSC to the exhibitor
Exhibitors with 100 square feet (10’x 10’ booth) – 300 square feet
- Crated or palletized freight = base rate of $2.25 per square foot… (or $225 per 10’x10’ booth)
- Loose boxes or cartons which need to be palletized for fork lift or brought in on flat carts = Add $1.00 per square foot to base rate
- Load in or load out on overtime = Add $1.00 per square foot to base rate for each occurrence
Exhibitors with 301 square feet – 600 square feet
- Crated or palletized freight = base rate of $2.00 per square foot
- Loose boxes or cartons which need to be palletized for fork lift or brought in on flat carts = Add $1.00 per square foot to base rate
- Load in or load out on overtime = Add $1.00 per square foot to base rate for each occurrence
Exhibitors with 600 square feet or more
- Crated or palletized freight = base rate of $1.75 per square foot
- Loose boxes or cartons which need to be palletized for fork lift or brought in on flat carts = Add $1.00 per square foot to base rate
- Load in or load out on overtime = Add $1.00 per square foot to base rate for each occurrence
Another model might be to have material handling costs billed to exhibitors on a “time and materials” basis.
Material handling pricing model based on “time and materials”
a) Time—assume the total cost of a worker to handle exhibitor freight is $85/hour. This includes the cost the general service contractor must pay the worker per hour, including vacation and benefits. Also included is the general contractor’s employee time to supervise the labor, payroll costs, and profit. Assume for each 10’ x 10’ booth, it requires (1.5) workers for (1.5) hours to unload the exhibitor freight from a truck and move it into the exhibitors booth, removing the empty crates/boxes from the booth once they are unpacked and store them, and finally return the empty crates/boxes at the close of the show, and once they are packed, load them out onto a truck. This example also includes costs for special handling, i.e., loose boxes, and miscellaneous non-forklift driving freight personnel, i.e., checker, etc.
The straight “time” cost per 10’ x 10’ booth would be $191.25
If on overtime, add 25% ($47.81) or…$239.06 per 10’ x 10’ booth
b) Materials—assume that the general service contractor rents (some GSCs own this equipment, but let’s assume they are rented) three (3) forklifts per (100) booths. (400) booths = (9) forklifts.
Cost of forklift per week…approx. $500 x 9 = $4,500
Cost of delivery/pick-up…approx. $400
Cost of fuel/surcharge…approx. $75 x 9 = $675
Sub total = $5,575
Plus…standard 30% contractor mark-up of materials =$1,672.50
Total materials cost for (9) forklifts = $7,247.50 divided by 400 booths = $18.12 per 10’ x 10’ booth
Total cost for 10’ x 10’ booth on straight time based on “time and materials” : $191.25 + $18.12 = $209.37
c) The cost per hour would be negotiable between the general service contractor and the event producer, i.e., lower or higher depending upon labor costs in a particular city, size of show, dates and location, length of contract between event producer and GSC, etc.
d) Because this model is based on actual time and materials utilized, I would not provide a discount to exhibitors who rent larger space.
e) I do not see this model being packaged into the event producer’s booth fee cost, but rather billed directly from the GSC to the exhibitor
In order to make either one of these models more affordable for the exhibitor, the general service contractor base rate, e.g., cost per square foot, or cost per hour, must be structured low enough so that the total material handling cost to the exhibitor would be at least 50% lower than the anticipated material handling cost to exhibitors utilizing the existing CWT pricing model. Otherwise we would just be swapping out “units of measure.” And, as I previously outlined, in order for the base rate to come down, it must be accepted and encouraged industry wide. Event producers have to be open to a model where GSCs charge for what have typically been complimentary show management items and for GSC personnel time and travel.
These are just my initial ideas to spark thoughts and conversation. I realize that material handling is just one facet in the current trade show business model that needs to be addressed in order to make exhibitor participation in trade shows more affordable. I hope that many of you out there feel the same way. The current tradeshow model is outdated, overpriced and desperately needs to be revamped in order to attract customers (exhibitors) and flourish.
Thanks for reading and I welcome your thoughts and comments.
