Are You Prepared for the Dimensional Weight Pricing Model?
As you have heard, shipping giants UPS and FedEx have both adjusted their rate model, basing them now on package dimension versus weight only. Going forward, they will be charging the greater of the two. Both companies have tools on their website you can use to estimate the shipping cost for a particular package.
This initiative came about as a way for their delivery people to conserve space in their trucks, as well as the amount of fuel used while out on the road. With web sales trending upward each year, this means brands could see an unwelcome surge in their shipping expenditures.
So, how can you keep your shipping costs under control, despite unavoidable rate increases? Read these tips to learn more:
1. Negotiate with UPS and FedEx
It worth the time to call and ask UPS and FedEx if they would negotiate lower shipping rates for your business. Despite both concurrently hiking their rates, they are still competitors who want your business. If you are under a third party fulfillment model, have a discussion with your provider to leverage the entire volume and not just your brand volume. Good third party fulfillment centers should be doing an analysis for you on a regular basis.
2. Fulfillment Center Location
Is your Fulfillment Center centrally located? A move to using a location in the Midwest could decrease the average distance a package needs to get to its destination, which is a factor in the formula that carriers use to determine charges.
3. Consider Your Current Package Protocol
Gone are the carefree days when a small or lightweight item, such as a tube of lipstick or a throw pillow, could be placed in a giant box and shipped off to the customer. Companies must now choose and use the smallest package needed to ship their items. Obviously, fragile items will require packaging materials to protect them from damage, but choosing box sizes more judiciously has become a necessity. Can you ship more orders in a ploy bag or padded mailer? Ensure your operations partner is optimizing packaging materials.
4. Rethink Your Go-To Dunnage
You may prefer packaging materials (dunnage) that are dense, compared to more lightweight varieties (such as air pillows), but you might pay if you don’t make the switch. Also consider if you could use less dunnage and still safely ship an item. More efficient packaging could equal less dunnage.
5. Additional Options
It’s noteworthy to mention that the United States Postal Service will continue to charge by weight only, possibly prompting more customers to utilize their services instead of UPS or FedEx. Review shipping packages via SurePost or SmartPost, local deliveries are handled by USPS. DHL recently rebranded its DHL Global Mail service in the US to DHL eCommerce. None of these options charges DIM pricing, and should be considered.
6. The End Result
The aforementioned tips are workarounds for dealing with this increase. If anything, they should mitigate the pain of these new rates. If there’s still a surplus after all, slightly raising your prices on certain products, eating the difference yourself, or dropping the few products that are suddenly far more costly to ship remain viable options.
With careful planning and a little legwork, you can work around this shipping rate hike that was thrust upon the world by UPS and FedEx, or at least make it more tolerable. And we can help! Promotion Fulfillment Center can assist you in finding the best shipping model and packaging solutions for your brand, while building upon your brand promise to your customers. Contact us today to learn how we can help and reduce your costs!