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36 DC VELOCITY OCTOBER 2015 www.dcvelocity.com
pers have been granted waivers or
deferrals from the pricing changes.
Virtually the entire shipping population lost the exemption, though
some of the larger shippers were
given a higher divisor to work with,
thus effectively mitigating some of
the increases, he said.
FedEx will likely decrease the benefits of the higher divisor over the
life of the contract, which is typically
three years, Martinez said. By contrast, UPS generally ties any divi-sor-related concessions to the length
of the contract without any phase-outs, he added.
A DIFFERENT VIEW
Martinez’s comments stand in sharp
contrast to those of Paul Steiner, vice
president of strategic analysis at consultancy Spend Management Experts.
Steiner said the vast majority of large
shippers his firm consults for have
received either full waivers for the length
of their contracts or, in the worst case,
deferrals that run for most of the contractual period. He added that few customers have felt the need to ask how
to reduce box sizes and empty packing
space, steps that would help cut dimensional shipping costs.
Steiner said the 2011 reductions in
the carriers’ dim-weight divisors to 166
from 194, which applied to all shipments except ground parcels of under
three cubic feet, had a more profound
impact on the market than the most
recent adjustments.
That said, Steiner, who spent 17 years
at UPS in various executive roles including global pricing, said both carriers will
find ways to offset foregone revenue
associated with waivers and that their
compensation will likely come from the
budgets of small to mid-sized shippers
that lack the volume and negotiating
leverage of bigger companies.
Paula Heikell, chief marketing officer
for consultancy Advanced Distribution
Solutions Inc. (ADSI), concurred with
Steiner’s assessment of a bifurcated market with large and small shippers experiencing different outcomes.
Heikell said all shippers stand to benefit
from the development of mobile handheld dimensioning devices that provide
upstream visibility of package dimensions so orders then don’t have to be
pulled and repacked to comply with
the carriers’ guidelines. The equipment,
which is not cheap but stands to gain
critical mass as prices come down, will
also be invaluable in helping companies manage dimensioning in the complex but increasingly important area of
returns management.
Michael Lambert, vice president of
strategic solutions for consultancy Green
Mountain Technology (formerly Green
Mountain Consulting), falls somewhere
in between Martinez’s views and those
