Don’t be a DIM weight; think outside the box

From an economic perspective, what you are shipping tends to matter less than the language of the agreement you have in place with the carriers that govern it. So never mind how you’re going to fit that 3.4-cubic-foot (18” x 18” x 18”) box into the trailer, sit back and let the driver handle that. What you need to worry about most is small in dimension, yet enormously influential – your pricing agreement.

As many of you know, FedEx Corp. and UPS ushered in 2011 with rate increases, which they have outlined on FedEx.com and UPS.com, respectively. Here is an overview.

In January both carriers implemented a net average ground increase of 4.9 percent. The full average rate increase of 5.9 percent was partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point.

Even though the average announced increase was 4.9 percent, the all-important zone 2 one-pound minimum charge is up $0.33 cents to $5.17, a 6.8 percent increase. Analysis shows the 1-5 pound ground rates are up 7.7 percent, 6-10 pounds +7.2 percent, 11 – 15 pounds +6.5 percent, 16 – 20 pounds +6.1 percent and 21 -35 pounds +5.8 percent.

The carriers also implemented a number of changes to their accessorial rates — here are the highlights:

  • Residential/Home Delivery Surcharge is up $0.25 to $2.45, an 11.4 percent increase.
  • Declared Value has increased $0.05 per $100 to $0.75, a 7.1 percent increase. The minimum charge for Declared Value has increased $0.15 to $2.25.
  • The Address Correction charge for ground has increased $1.00, from $10.00.
  • Delivery Area Surcharges are up 15 cents to $1.85 for commercial addresses (an 8.8% increase) and up 25 cents to $2.75 or $3.00 for residential addresses (9% and 10% respectively).

UPS Air and International services had an announced increase of a net 4.9 percent through a combination of a 6.9 percent increase in rates and a 2 percent reduction in the UPS Air and International services fuel surcharge. FedEx Express rates had an announced increase of a net 3.9 percent through a combination of a 5.9 percent increase in rates that are partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points.

An example of similar services for the carriers reveals the following: a FedEx Priority Overnight package weighing 5 pounds to zone 4 had a published rate increase from $50.35 in 2010 to $54.00 in 2011. This represents a 7.2% increase. The same package with an AM delivery at UPS increased from $46.70 to $50.80; an 8.8% change. Keep in mind that different comparisons may show slightly different increases for all services.

Without question, the biggest surprise of this year’s GRI announcement was the effect of the change to the dimensional weight factor (DWF). The carriers changed the dimensional weight volumetric divisor from 194 to 166 for U.S. domestic services. Dimensional weight factor for international export shipments has changed from 166 to 139.On its face, the 2011 rate change, while undesirable, is not unprecedented. But a closer look at how you could be affected by the DWF reduction is an eye-opener.

Remember that 3.4 cubic-foot (18” x 18” x 18”) package? Let’s assume it has a scaled weight of 27 pounds. When the divisor changed from 194 to 166 in 2011, its billable weight increased from 31 to 36 pounds. Assuming an average incentive of 30 percent for this shipment (an easily attainable incentive) and considering the rate change, on Dec. 31, 2010 that package would have a net rate of $10.56 to zone 5 before any other surcharges. On Jan. 3, 2011, that same package has a net rate of $12.84 prior to surcharges. No need to break out your calculator, that’s a 21.6 percent increase, a far cry from the advertised general rate increase of 4.9 percent for ground shipments.

While a hike in the neighborhood of five percent might not break the bank, it more importantly does not break the ice. In reality, the advertised increases are just the tip of the iceberg. And failure to adequately understand what lay beneath the surface can sink the margin between your budget and your bottom line, fast.

Another area that requires a second look is optimization; to help you understand your own business at a more granular level than you may have ever imagined. Optimization is about utilizing current technology and reporting capabilities to get your package off of a plane and onto a trailer, or to reduce the number of packages in multiple piece shipments. There are reporting services available that will highlight each package that would have arrived at the same time/day regardless of whether you shipped via ground or air. Of course, your business has rules in place, and they are there for a reason. Still, utilizing optimization technology efficiently will allow you to have visibility of such scenarios, making it easier to hold your employees accountable and to make adjustments where possible.

I know what you’re thinking: “Decisions about ground vs. air probably don’t apply to this company. We have great discounts within the terms of our agreement with our carrier.”

While it may be true that you have a great air discount, think of it like this: If you ship a package via air for a cost of $19 and the package would have arrived at the same time had you shipped ground for $6, you’re looking at a discount of nearly 70 percent. Regardless of your agreement with your carrier, savings that measurable will trump even the best incentives. In situations such as this, the implementation of optimization to effectively move from air to ground can put money back on a shipper’s bottom line in ways far greater than even the deepest air discounts. Simply put, switching service levels will always override incentives.

The other area of focus through optimization is package consolidation. Multiple package shipments may be the result of packages being prepared/manifested at different times during the day or even by different employees. Look for reports that identify opportunities to consolidate such shipments. One 20 pound package to a receiver will always be less expensive than two 10 pound packages to the same address.

Another area ripe with savings opportunity lies within the “SmartPost” and “Basic” services offered by FedEx and UPS, respectively. Industry sources have unofficially confirmed that UPS will launch a new service offering in early 2011, which is designed to better rival FedEx’s “SmartPost”.

These hybrid services are offered by the carrier to clients that may require certain volume levels. The aim is to eliminate certain surcharges. There are drawbacks, however. Due to the fact that these programs mix the services of the private carrier with the United States Postal Service, the savings they produce can come at the expense of limited visibility and an increase in the total time in transit.

How does your pricing agreement fit in the trailer?

66 Comments

  1. I do not know whether it’s just me or if perhaps everybody else encountering
    issues with your site. It appears like some of the text within your posts
    are running off the screen. Can somebody else please comment and let me know if this is
    happening to them too? This might be a issue with my web browser because
    I’ve had this happen previously. Many thanks

  2. I would like to thank you for the efforts you’ve put in writing this blog.
    I’m hoping to see the same high-grade blog posts by you in the future as well.
    In fact, your creative writing abilities has motivated me to get my own, personal blog now 😉

  3. Thank you for the auspicious writeup. It in fact was a amusement account it.
    Look advanced to more added agreeable from you! By the way, how can we communicate?

  4. Spot on with this write-up, I truly believe that this amazing site needs a lot more attention. I’ll probably be returning to see more,
    thanks for the advice!

  5. I think everything posted was actually very logical.
    But, what about this? what if you wrote a catchier post title?
    I am not suggesting your information isn’t solid., however
    what if you added a title to possibly grab folk’s attention? I mean Don’t be a
    DIM weight; think outside the box is kinda plain.
    You ought to glance at Yahoo’s home page and see how they write article headlines to grab viewers to click.
    You might add a video or a pic or two to get readers interested about
    everything’ve written. In my opinion, it would bring your website
    a little livelier.

  6. Hi! Do you know if they make any plugins to safeguard against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on. Any tips?

  7. If you wish for to get a great deal from this paragraph then you have to
    apply such methods to your won blog.

  8. If some one wishes to be updated with latest technologies
    after that he must be pay a quick visit this website and be
    up to date everyday.

  9. Does your website have a contact page? I’m having trouble locating it but, I’d like to send
    you an e-mail. I’ve got some recommendations for your blog
    you might be interested in hearing. Either way, great blog and I look forward
    to seeing it develop over time.

  10. Hey There. I discovered your blog the use of msn. This is an extremely well written article.

    I’ll be sure to bookmark it and come back to learn extra of your useful info.
    Thanks for the post. I will certainly comeback.

  11. Hello my loved one! I want to say that this article is amazing, great
    written and include approximately all important infos. I would like to
    peer more posts like this .

  12. At this time I am going away to do my breakfast, afterward
    having my breakfast coming over again to read further news.

  13. My spouse and I stumbled over here by a different web address and
    thought I may as well check things out. I like what I see so now i am following you.

    Look forward to looking into your web page for a
    second time.

  14. What’s up i am kavin, its my first occasion to commenting anywhere, when i read this post i
    thought i could also make comment due to this brilliant paragraph.

  15. You need to take part in a contest for one of the finest websites
    on the internet. I most certainly will recommend this blog!

  16. Hi there, I do think your web site could be having browser
    compatibility issues. When I look at your web site in Safari, it looks fine however when opening in Internet Explorer, it’s
    got some overlapping issues. I simply wanted to give you
    a quick heads up! Apart from that, fantastic site!

  17. This site was… how do you say it? Relevant!! Finally
    I have found something which helped me. Thanks a lot!

  18. Hi! I just wanted to ask if you ever have any problems with hackers?

    My last blog (wordpress) was hacked and I ended up
    losing many months of hard work due to no back up.
    Do you have any solutions to stop hackers?

  19. Hi there, I read your new stuff daily. Your story-telling style is witty, keep doing what you’re doing!

  20. I’m not sure exactly why but this site is loading extremely
    slow for me. Is anyone else having this issue or is
    it a issue on my end? I’ll check back later and see if the problem still exists.

  21. Thank you for another informative blog. The place else may I am getting that type of information written in such a perfect manner?
    I have a project that I am simply now operating on, and I have been at the glance out for such info.

  22. Hey there! I could have sworn I’ve been to this blog before but after
    reading through some of the post I realized it’s new
    to me. Anyhow, I’m definitely happy I found it and I’ll be bookmarking and checking back often!

  23. Just desire to say your article is as astonishing. The clearness to your put up is
    just great and i can think you’re knowledgeable
    on this subject. Well with your permission allow me to clutch your RSS feed
    to keep updated with forthcoming post. Thank you a million and please keep up the
    rewarding work.

  24. Hi Dear, are you really visiting this web page on a regular basis, if so after that you will without doubt get
    good experience.

  25. Very nice post. I just stumbled upon your weblog and wished
    to say that I’ve truly enjoyed browsing your blog posts.
    After all I’ll be subscribing to your feed and I hope you write again very soon!

  26. It’s the best time to make some plans for the future
    and it is time to be happy. I’ve read this post and if I could I want to suggest you few interesting things or
    advice. Perhaps you could write next articles
    referring to this article. I want to read more things about it!

  27. Wow, wonderful blog format! How lengthy have you ever
    been blogging for? you make blogging glance easy.
    The overall look of your website is fantastic, as neatly as the content material!

  28. Its like you learn my thoughts! You seem to understand a lot about this, such as you wrote the guide in it or
    something. I feel that you could do with a few % to drive the message home
    a bit, but instead of that, that is fantastic blog. A great read.
    I will definitely be back.

  29. I am extremely impressed with your writing skills and also with the layout on your weblog.
    Is this a paid theme or did you modify it yourself?

    Either way keep up the nice quality writing, it is rare
    to see a great blog like this one these days.

  30. Wow, this post is good, my sister is analyzing such things, thus I am going to convey her.

  31. Great blog here! Also your web site loads up fast! What web
    host are you using? Can I get your affiliate link to your host?
    I wish my site loaded up as quickly as yours lol

  32. We absolutely love your blog and find a lot of your post’s to be what precisely I’m
    looking for. Would you offer guest writers to write content for yourself?
    I wouldn’t mind creating a post or elaborating on many of the subjects you write with regards to here.
    Again, awesome website!

  33. It’s going to be ending of mine day, except before end I am reading this wonderful paragraph to increase my knowledge.

  34. Wow that was odd. I just wrote an extremely long comment but after I clicked submit my comment didn’t show up.
    Grrrr… well I’m not writing all that over again. Anyways, just
    wanted to say wonderful blog!

  35. Great items from you, man. I’ve remember your stuff previous to and
    you’re simply too fantastic. I really like what you have bought
    here, really like what you’re stating and
    the best way during which you assert it.
    You’re making it enjoyable and you continue to care for to keep it wise.
    I can’t wait to read far more from you. This is really a wonderful
    site.

  36. This paragraph gives clear idea designed for the new users of blogging, that genuinely how to do blogging and site-building.

  37. Everything composed was actually very logical. But, consider this, suppose you were to
    create a killer title? I ain’t saying your content
    isn’t solid., however what if you added something that grabbed people’s attention? I mean Don’t be a DIM weight; think outside
    the box is kinda vanilla. You might look at Yahoo’s
    front page and see how they create news titles to grab people to open the links.
    You might add a related video or a related picture or two to
    get people interested about everything’ve written. In my opinion,
    it might make your website a little bit more interesting.

  38. Fastidious answer back in return of this question with solid arguments
    and describing the whole thing on the topic of that.

  39. Someone essentially assist to make severely
    posts I’d state. That is the very first time I frequented your
    website page and thus far? I surprised with the analysis you made to
    create this particular put up amazing. Fantastic activity!

  40. Wow! This blog looks just like my old one!
    It’s on a totally different subject but it has pretty much
    the same layout and design. Excellent choice of colors!

  41. Hello it’s me, I am also visiting this web page daily, this website is genuinely
    fastidious and the people are actually sharing good thoughts.

  42. Have you ever considered about including a little bit more than just your articles?
    I mean, what you say is valuable and everything. However just imagine if you added
    some great visuals or videos to give your posts more,
    “pop”! Your content is excellent but with pics and video clips, this site could
    undeniably be one of the most beneficial in its niche. Terrific blog!

  43. Hello mates, pleasant article and nice urging commented here, I am truly enjoying by these.

  44. I blog quite often and I really appreciate your information. This great
    article has really peaked my interest. I am going to take a note of your blog and keep checking
    for new information about once per week. I opted in for
    your RSS feed too.

  45. Greetings from Los angeles! I’m bored at work so I decided to check out your site on my iphone during
    lunch break. I enjoy the information you present here and can’t wait to take
    a look when I get home. I’m shocked at how fast your blog loaded on my cell phone ..
    I’m not even using WIFI, just 3G .. Anyhow, wonderful
    blog!

  46. It’s genuinely very difficult in this active life to listen news
    on TV, therefore I simply use world wide web for that reason, and get the latest news.

  47. Hey I know this is off topic but I was wondering if you knew of
    any widgets I could add to my blog that automatically tweet my newest twitter updates.
    I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would
    have some experience with something like this. Please let me know if you run into anything.
    I truly enjoy reading your blog and I look forward to your new
    updates.

  48. It’s going to be finish of mine day, however before finish
    I am reading this great article to increase my knowledge.

  49. What i don’t realize is actually how you are now not really much more
    neatly-appreciated than you might be right now. You’re so intelligent.
    You already know thus considerably in relation to this topic,
    made me in my opinion imagine it from a lot of varied angles.

    Its like men and women are not fascinated until it is one thing to do with Girl gaga!
    Your individual stuffs excellent. At all times care for it up!

  50. I just like the valuable information you provide to your articles.
    I will bookmark your weblog and check again here frequently.

    I am somewhat certain I will be told lots of new stuff right right here!
    Best of luck for the following!

  51. I love what you guys tend to be up too. This kind of clever work and exposure!
    Keep up the great works guys I’ve included you guys to blogroll.

  52. This is very fascinating, You’re an excessively professional blogger.
    I’ve joined your rss feed and sit up for in search of extra of your excellent post.

    Additionally, I have shared your site in my social networks

  53. This is the right blog for everyone who wishes to find out about this topic.

    You realize a whole lot its almost hard to argue with you (not that
    I personally will need to…HaHa). You definitely
    put a new spin on a subject that has been discussed
    for ages. Great stuff, just great!

  54. I used to be able to find good information from your
    blog posts.

  55. Excellent post. I was checking constantly this blog and I’m impressed!
    Extremely useful information specially the last part :
    ) I care for such info a lot. I was looking for this certain information for a long time.
    Thank you and good luck.

  56. Hi there, I found your blog by way of Google
    at the same time as searching for a related subject,
    your web site got here up, it seems to be good.
    I have bookmarked it in my google bookmarks.
    Hi there, just changed into alert to your blog via Google,
    and located that it is truly informative. I’m gonna be
    careful for brussels. I’ll be grateful should you continue this in future.

    Numerous other folks will probably be benefited from your writing.
    Cheers!

  57. It’s actually a cool and useful piece of information. I’m satisfied that you shared this useful info with us.
    Please keep us up to date like this. Thanks for sharing.

  58. Excellent post. Keep writing such kind of info on your blog.
    Im really impressed by your site.
    Hi there, You’ve done an excellent job. I’ll certainly digg it and individually suggest to my friends.

    I am sure they’ll be benefited from this website.

  59. Great info. Lucky me I came across your site
    by accident (stumbleupon). I have saved as a favorite for later!

  60. You’re so interesting! I do not think I’ve read anything like that before.
    So nice to discover another person with some original
    thoughts on this subject. Seriously.. many thanks for starting this up.
    This website is something that is required on the internet, someone with a little originality!

  61. I was recommended this blog by my cousin. I am not sure whether
    this post is written by him as no one else know such detailed about my trouble.
    You are wonderful! Thanks!

  62. Thanks a bunch for sharing this with all people you actually recognise what you’re talking about!
    Bookmarked. Please also visit my website =). We will have
    a hyperlink alternate arrangement among us

  63. What a information of un-ambiguity and preserveness of precious know-how regarding
    unexpected emotions.

  64. Today, I went to the beach front with my children. I found a
    sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She
    put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear.
    She never wants to go back! LoL I know this is
    totally off topic but I had to tell someone!

  65. My brother recommended I might like this blog. He was once totally
    right. This put up actually made my day. You cann’t imagine simply how much
    time I had spent for this information! Thanks!

  66. Ina

    I got this web page from my pal who told me regarding this website
    and at the moment this time I am visiting this web page and reading very informative articles here.

Leave a Comment