Fuel Costs: Exhibitors Pay the Price

Gas prices: It's a topic sure to generate a conversation these days.

With oil hitting a record-high $102 per barrel Feb. 27, there is plenty to talk about. Unfortunately, when it comes to moving companies, general service contractors that offer transportation services and, ultimately, the exhibitors, there seems to be one party bound to absorb the cost.

“It's got to be passed on (to exhibitors),” said Steven Schuldenfrei, president of the Trade Show Exhibitors Assn. “They have very little choice.”

“They're feeling the crunch as much as anybody,” George Hersh, CEO and owner of Sports Associated, said of passing on the cost to clients.

Sports Associated specializes in shipping exhibit freight that requires a little more care, including motorcycles and snowmobiles. The company stores, transports, sets up, disassembles and takes the exhibit back to storage.

“They still have to go to the show, but they're not taking everything they used to take,” Hersh said.

The rising cost of transportation is directly tied to the price of diesel fuel. Hersh said he recently paid $3.70 per gallon for diesel in California. So, when trucks rack up 120,000 miles a year, burning gas at the rate of 5 to 7 miles per gallon, the bill gets pricey.

“It's killing us,” said Jim Ondak, owner of a Cleveland-based franchise of Adcom Worldwide. “It's that simple.”

Ondak has two semis that run on diesel, and each truck runs about 40,000 miles each year, he said. Hauling tradeshow freight is about 20 percent of his business.

“(Fuel prices are) putting me out of business, to be quite honest with you,” he added.

But what's the alternative to the dependence on oil?

Biodiesel, a diesel fuel made from soybeans, much the same way ethanol is made from corn, is a possibility. Even though biodiesel is slightly cheaper than regular gasoline, some who haul exhibit freight said it's not a viable option.

“There's absolutely no consistent supply,” Hersh said. Plus, “there's real hesitancy to use it in trucks.”

Vehicles, including semis, can run on a low-percentage blend of biodiesel and traditional diesel, which is available in some places. Minnesota currently is the only state with a mandate to offer a 2-percent biodiesel blend. Washington will start doing so Dec. 1.

Danny Loe, director of marketing and public relations at ABF Freight System, said the company uses the blends required by statutes, but in the Chicago area during warm months, ABF uses a higher blend from the in-house fuel facility.

ABF is part of the U.S. Environmental Protection Agency's SmartWay Transport Partnership, which aims to increase energy efficiency and reduce air pollution.

“We are an environmentally conscious company,” Loe said. “However, mandates and tax benefits do play a large role in our use of biofuel.”

Freeman doesn't use much biodiesel because of the inconsistent national supply, but officials there are looking for other ways to be more efficient, said Ellen Beckert, the company's corporate director of marketing and communications.

“We are currently building a new regional distribution center in the western region, which will bring a lot of the basic materials and supplies we use for event production 1,200 miles closer to those offices than when we transported them from Dallas,” she added.

Eventually, though, Freeman won't be able to absorb the increased cost, Beckert said. Officials then will consult with the company's customers about how to address the issue.

At GES Logistics, which is the transportation side of GES Exposition Services, customers have been billed a fuel surcharge since 2002, said Bill Monforte, senior director of logistics and transportation.

“People are starting to feel the crunch of the high price of fuel,” he added.

Despite the increasing cost of oil and the impact on exhibitors, Schuldenfrei remained optimistic about the value of face-to-face events.

“I don't think, however, it will force a lot of growth into the Web,” he added. But, “it maybe will make regional shows more popular for attendees and exhibitors.”

Schuldenfrei said people are trying to combat the extra costs by cutting back, and the trend is moving to lighter booths.

Otherwise, he said, “I think we're just in for higher costs.”