Four Ways to Counter the FedEx/UPS Weight Charges
By now we are all aware of the monumental, high-impact changes both FedEx and UPS are making for ground shipments effective January 1, 2015. All ground packages, regardless of size, will be subject to DIM (dimensional) charges, which could amount to a double digit increase on top of last year’s 4.9 percent rate increase. Currently, only 15 percent of packages (those 3 cubic feet or greater) are subject to DIM charges.
You calculate dimensional weight by multiplying a package’s length by width by height and then dividing by a dimensional factor. (Image Source: Multichannel Merchant) Carriers are already billing the greater of the actual weight and the dimensional weight for packages shipped by air. Later, carriers extended dimensional weight calculations to ground shipment for packages that were over three cubic feet. With this announcement, they are adopting the practice of charging the higher of the two calculations for all ground shipments. Retailers who ship small, lightweight items will be paying upwards of 30 percent more. For example, a box weighing 21 pounds with the dimensions of 20 x 20 x 20 inches shipped via ground service will be charged as weighing 49 pounds based on the current dimensional weight factor of 166.
What prompted these major carriers to make this drastic change now? The surge in online consumer spending has led to tremendous growth in B2C shipments. What carriers have found is that many of these packages are shipped in large, but lightweight boxes. This prevents carriers from operating at their maximum operating weight and causes inefficiency and lost time as drivers struggle to meet their daily delivery quotas.
Barring replacing their entire fleet with larger trucks, carriers opted to tighten their DIM policies in an effort to change the behavior of shippers. It remains to be seen whether these changes are necessary to support the overall fiscal health of these carriers, but regardless of their reasoning it seems these changes are here to say.
So what can brands do to combat the anticipated spike in ship rates? Below we offer a few suggestions to help you avoid those higher costs.
Assess Your Packages
Take a sample of the types of packages you are currently shipping. Many companies and fulfillment providers have access to in-line cubing equipment that quickly measures the dimensions of each package. Some shippers use cartonization software that optimizes the carton size for each shipment. The key is to get the DIM number as close to the pounds per cubic foot (PCF) as possible in order to satisfy the carrier requirements and minimize rate increases.
Look Into Smaller Shipping Materials
Finding the worst offenders when it comes the packages you’re shipping…meaning those with the lowest PCF relative to the DIM, could offer significant cost savings down the road. Some shippers are limited in the number of box sizes they offer, so be sure to find a provider who can accommodate your packaging needs. These changes will most likely result in an increase in the variety of boxes from which to choose, allowing brands to find the perfect box to satisfy all their shipping needs.
Reduce Your Dunnage Weight
The material used to cushion the goods inside the package (aka dunnage) can add weight to your package. Using less or lighter dunnage may allow you to use a smaller package and realize cost savings. While recyclable and affordable, Kraft paper can add several ounces to a package due to its density. Your best option may be air pillows, which offer exceptional cushioning, are virtually weightless and can now be found in biodegradable varieties.
- The key to mitigating high shipping charges is to partner with an experienced fulfillment provider that can provide the best possible rate, while still delivering an exceptional brand experience to your customer base.
- Bowen Smith, SVP Sales & Marketing, PFC
Assess Your Carrier Options
While UPS and FedEx have tightened their policies on DIM, USPS is still operating on more lenient standards. With USPS you can ground ship a package with no DIM restrictions and air shipments also offer less confining DIM rates. In fact, UPSP recently announced a reduction in rates for commercial package shipping. There are also regional carriers to consider. Most have more relaxed DIMs as well, since the hauling distances are typically shorter.
Act Now to Avoid Surprises
The early announcements by FedEx and UPS have given brands the opportunity to assess the current state of their packaging and shipping. One way brands can combat these higher fees is to find a parcel logistics provider with the expertise and access to economies of scale that a single brand may not have the ability to leverage on its own. Find a partner who can provided analysis and proactive recommendations driven by actual ship data.
“The parcel shipping market place is changing at an accelerating pace. The change to dimension as the primary driver of cost makes it very difficult for most shippers to understand exactly how to project their costs for the upcoming year. This is an important time for shippers to evaluate all market options at a very detailed level for 2015, but more importantly to implement flexible processes and solutions to enable easy change as this volatile market continues to evolve,” said Matt Reiker, COO of Red Wagon Logistics.
Much like your business has a multi-channel marketing strategy, parcel experts offer a wide range of shipping and transportation services from zone skipping to LTL transport to small parcel delivery couriers. They are experts at eliminating wasteful costs to add flexibility and efficiency to your supply chain.
How PFC Can Help
Promotion Fulfillment Center has the ability to streamline your shipping process and find the optimal packaging solution to drive down rates. We do all this, while fulfilling your brand promise to your valued customers with on-time deliveries and pinpoint accuracy. We also go the extra mile by allowing brands complete visibility and transparency into their product shipping experience. Give your brand a competitive advantage and call PFC today.
About Promotions Fulfillment Center
At PFC, our clients’ success is our number one priority. Since 1974, PFC has delivered outstanding results, with turnkey solutions in fulfillment, e-commerce, rebates, sweepstakes, coupons and contact center – all backed by leading technology. Brands who partner with PFC have historically achieved considerable cost savings in excess of 35 percent and have significantly improved their turn times. PFC allows clients to focus on their big picture business goals, while skillfully managing all the details. For more information call (800) 493-7063.
Sources: F. Curtis Barry, Parcel Media