No subject in the Trade Show Industry is as contentious as Material Handling or Drayage, and oddly enough, that’s not because of what people know about the subject. Far more often, it stems from what they don’t know and don’t understand and can’t learn about it that frustrates them. Even with a rate sheet in front of them, it’s often difficult to calculate what their final charge will be much less comprehend why the rates are so high.
Let me put it in perspective based on my background. I was an owner of a trade show contracting firm, who for 10 years during the 1980’s, witnessed phenomenal growth in the number of trade show contractors in the industry. Then in the early 90’s, there was a vast contraction and consolidation of firms which summarily led to the general landscape of what we see today. Both then, and now, material handling revenue is the big income generator for any trade show. But does it net more dollars than what a contractor has to give away to get it?
I’m going to lay out the thinking behind the rates. Even though you may not like the bottom line, you will at least begin to understand how it was created.
A Little Background
Trade show contractors have been in my opinion, and will always will be, operating at a distinct disadvantage when it comes to the income pie that’s divvied up from exhibitor generated revenues at trade shows; which is a result of an exclusive investment that the contractors alone makes to book an event. It’s sort of akin to the pro basketball player getting drafted as a lottery pick and everyone in the player’s family now says; “We’re rich, We’re rich” even though they didn’t contribute materially to the valued position that the star finds himself in at that moment. So here are just a few of the new family members to be aware of when evaluating the overall situation:
1) Show Management In many instances show management actually allows show contractors to bid on the show, and who in turn, use the money they receive to finance a variety of association expenses during the year or maybe their own salary or raises etc.. In addition, association executives will often only entertain bids where the contractor provides the carpet, registration, aisle banners, etc. at little or no cost to them in consideration of the having the right to be the “official service contractor.”
2) Building Management This is the facility where the event is taking place, and management of these facilities has over the years, siphoned off a variety of services that the official show contractors used to provide such as cleaning, electrical, and rigging which were once high margin items in the contractors business.
3) Outside Contractors Quite a number of members of this group are allowed to come into the show floor and work directly with Exhibitors such as installation and dismantle labor, florists, models, specialty furniture etc..
4) Unions; need I say more?
5) Contractor-Sub Contractor Arrangement This type of arrangement occurs when a service contractor has a long term contract with an association for their events, but one of the events is being held in a city where the primary contractor doesn’t have an office. Typically the contractor will sub contract to a local contractor who does have the local structure and manpower to service the event. Seldom will the material handling rate in this scenario, be less than what it would otherwise been because there are now two mouths to feed.
Ask yourself how many of these family members actually made a monetary contribution toward the registration counters, aisle banners, or aisle carpet? The income circle has now been divided up in more ways than a Twinkie at a third grade sleepover, and the result for the show contractors is obvious. He keeps all the expense and shares the income, and the options for him to recoup the lost income are quite limited. First, let’s review some of the categories that contribute to “material handling income” and see why they keep increasing.
How are Rates and Rate Categories Created? The following rate categories were created to generate sufficient bottom line profit for the show contracting business after the family members in numbers 1 through 5 above, have been fed.
Warehouse vs. Show Site Shipments
Typically, warehouse rates are more than show-site rates. The contractor is handling it more, receiving the freight in the warehouse, storing it, and transporting it to show-site. There are some instances where hotel shows and unique facilities don’t have the capacity, or have very limited capacity for receiving show-site shipments which is when they will publish a lower rate to the warehouse to encourage warehouse shipments and discourage show-site shipments.
Show-Site (Crated, Special Handling, Uncrated) Contractors publish an individual rate for each class of service. There is a separate rate for each based on real expense allocations, albeit the uncrated rate is generally more than the special handling rate for reasons you will see below.
Shipments would fall into this category would be most LTL shipments. Think of it this way. If you can drive a forklift onto a truck or trailer, pick up a crate or pallet, and pull it off the truck without additional help from another worker, or the driver having to get off his or her forklift, then the freight will make this category.
Special handling occurs when a shipment needs to be unloaded from a street level, or from the side of a truck or flatbed. A trailer, like the type a van-line uses, which is cubed out and must be hand un-stacked, than pulled out of a trailer, would be charged at the special handling rate. If a shipment was double stacked on a LTL carrier and the load had to be hand un-stacked in the trailer, that shipment would get charged special handling. Also, exhibitors who bring freight to the show themselves on their personal vehicles or trailers will often be charged for special handling because their vehicles don’t match up to the height of the loading dock thus adding additional unloading time.
It is important to note that you can’t always associate a type of shipper (LTL, van line) with a class of material handling. There are some LTL companies that at their break point will stuff a trailer to the gills just like a van line, and that freight will get tagged with special handling… even though it left the point of origin, un-stacked.
Packages that are delivered by any carrier that doesn’t show up with paperwork stating who the shipper is, ship to company, show name, booth number, weight, etc., will qualify as special handling because it causes the contractor to fill out the paperwork themselves and incur added expense. This would include FedEx and UPS. An air freight carrier is the better option and always, and I mean always, ship all packages together so as to avoid paying multiple 200 pound minimums per shipment.
Anything shipment coming in uncrated, pad wrapped, etc., will get charged the uncrated rate, and that rate is generally higher than the special handling rate. This category will often require a forklift driver and a person to steady the load etc. It’s never advisable to ship something to a show that’s uncrated, as there is a greater risk to the exhibitor’s merchandise, as well as a great risk to the contractor.
Somewhere, buried deep within each rate is a risk factor associated with handling each type of freight. Although the contractors have done a pretty good job of insulating themselves from payouts due to damage or loss, but they do have the workman’s compensation exposure which they can’t insulate themselves from. It is imperative that you as an exhibitor have your own business insurance plan to cover the potential damage or loss in moving your merchandise to and from show sites while in someone else’s care, custody, and control. If you don’t cover it, it won’t be covered!
Targeted vs Off Targeted Deliveries
This charge applies to deliveries to the advance warehouse as well as to the show site. Some contractors charge a percentage increase in the rate and others add-on a dollar amount per hundredweight. Either way, not being aware of the target dates can increase your cost by as much as 30%.
Final Tips and Tricks
If you as an exhibitor feel the need to have your own shipper pick up your merchandise, be sure to read the fine print of your service kit, and understand what time your driver must sign in at the marshalling yard in order to be allowed to pick up your freight. Missing this deadline might be one of the most costly miscues that you can make short of your shipping contractor’s failure to show up at all. Missing the deadline allows the contractor to force the freight off the floor and back to their warehouse, or automatically ship the freight back to you via their preferred carrier at a much higher rate. Also, always require your carrier in advance, to agree to pay the difference if they fail to show up on time for the pick up, and the freight is forced off the floor.
Want to see how all of the above effects your material handling expenses, play around with our Trade Show Material Handling Calculator and see how small changes can make a big difference.
By Lowell Nickens, Google+ profile and ShopForExhibits.com