DC Velocity - December 2014

BY DAVID MALONEY, SENIOR EDITOR
CUBING & WEIGHING

materialhandlingupdate

PARCEL SHIPPERS MAY BE IN FOR A SHOCK when they open their first parcel shipping bills of 2015. By that time, FedEx Corp. and UPS Inc. will have implemented what is known as “dimensional weight pricing” for all of their ground packages, including those measuring less than three cubic feet that were previously exempt from dimensional weight, or dim weight, pricing.

For the first time, parcels falling under the three-cubic-foot dimensional threshold will be priced based on a combination of weight and carton dimensions, not their weight alone. For shippers of lightweight items with packaging heft to them, this could spell double-digit price increases because the parcels will be rated based on the amount of space they occupy in a van. No longer will the carriers haul Styrofoam popcorn and other cushioning materials that amount to little more than air for free.

The companies say the pricing changes will foster greater packaging efficiency for shippers, reduce fuel consumption through better truck utilization, and result in a smaller carbon footprint. They are also likely to generate for the carriers hundreds of millions of dollars in additional revenues without significant fleet investments. “The simple reason for the new pricing structure is it is much cheaper for [FedEx and UPS] than buying more trucks and airplanes. They want to get more product into the trucks and airplanes they already have,” says Jack Walsh, director of sales and marketing for CASI, a company that provides dimensioning and weighing systems.

Before the Internet changed
shopping (and shipping) habits, a large portion of
parcel loads involved business-to-business shipments
that were optimally packed by the manufacturer.
Things are different in the age of e-commerce. Speed
has now taken precedence, and for most DCs doing
e-commerce fulfillment, it is faster for workers to
grab a larger carton than necessary than risk having to
repack an order because the carton originally selected
was too small.

Jack Ampuja, president of the packaging and supply chain consulting firm Supply Chain Optimizers, says an order picker chooses the wrong sized carton about a quarter of the time. “We have all gotten that small item, such as a flash drive, packed in a bread-box-sized carton,” he says.