DC Velocity - December 2016

www.dcvelocity.com DECEMBER 2016 DC VELOCITY 57 BY SUSAN K. LACEFIELD, EDITOR AT LARGE

CUBING AND WEIGHING

materialhandlingupdate

IN MID-2014, ATLANTA-BASED UPS INC. AND MEMPHIS, TENN.-BASED FEDEX CORP. MADE waves by announcing that, effective in 2015, pricing for all ground parcel shipments would be based on the packages’ dimensions and weight instead of their weight alone. At the time, consultants warned that the shift to so-called dimensional weight (or dim weight) pricing could result in rate increases for companies that ship lightweight, bulky packages and predicted that e-commerce shipments would be particularly hard hit. (For more on the specifics of dimensional weight pricing, see sidebar.)

The consultants were right; for many shippers, costs have increased. The good news is that there are ways to reduce the impact of this new pricing strategy. Many of these solutions are tied to packaging optimization strategies that reduce the amount of “air” that a company ships (think of a flash drive being shipped in a carton the size of a shoebox). Plus, there are places shippers can turn for advice and help.

INSIGHT FROM THE TRENCHES

One logical place to turn for help with packaging optimization would be a third-party logistics service provider (3PL). After all, 3PLs are often the folks packing the product. Mark Johnson, senior vice president of transportation and solutions for Scranton, Pa.-based 3PL Kane Is Able, says companies like Kane have come up with a multitude of best practices because they are in the trenches every day. Small and medium-sized businesses, in particular, can benefit from the 3PLs’ expertise because they typically lack the resources to study the impact the pricing change will have on their costs, Johnson says.

“We are always looking at ways to streamline packaging and reduce the amount of air that’s shipped,
and we play that back up to our customers,” he says. “If we find that handling someone’s materials in the
way they want them handled adds cost, that’s something that we would [communicate back to the client].
From the stackability of the product to the dunnage in a shipment, we are constantly looking at ways to
take out costs.”
Chattanooga, Tenn.-based Kenco Logistics Services, another 3PL, also employs packaging engineers that