Can a Dimensioning System reduce your warehousing and shipping costs? If so, how do you get the most for your investment?

By Paul Johnson, President Complete Mailing Solutions


With the ever-increasing costs of warehouse space and the recent introduction of shape-based pricing by major shipping carriers, many DC and warehouse managers are looking for ways to reduce costs, calculate rates more accurately and cope with ever-changing shipping and logistics requirements. For many, this begs the question… should you get a dimensioning system? Let’s take look…

Simply put, dimensional weighing systems efficiently automate the process of determining package size/shape and weight in conjunction with your shipping system. The optimal system for your operation will depend on shipping volume, size and type of items shipped and level of investment you wish to make. Companies that ship as few as 100/day find that an investment in a dimensional weighing system is well worth the expenditure.

Most companies have found that savings from dimensioning systems have resulted in payback in a little as a few weeks. Some areas where quantifiable savings are realized are:

  • Space optimization
  • Slotting optimization
  • Reduced shipping costs
  • Rate shopping and informed negotiations
  • Pre-manifesting for more efficient throughput
  • Pick/pack efficiency
  • Item tracking
  • Reduced labor costs (some companies reporting up to 90% savings in line labor)
  • Streamlined returns process
  • Data analysis to identify opportunities in areas such as capacity optimization, load balancing and bottleneck elimination

The list above is obviously just a summary and there’s more to unpack here than can be addressed in this blog post. If you’d like to dig deeper and learn the specific savings in each of these areas, check out this white paper: Dimensioning Systems: Getting the Most for Your Investment. It details how savings are realized for each of the bullet points above including how carriers are using the “black box” of dimensional-weight calculations to increase your overall spend.
In addition to details on cost savings, this white paper includes a guide to the 10+ Essentials to Look for in a Dimensioning System. After reading this white paper, you’ll be well-versed on what a dimensioning system can do for you and better equipped to evaluate the best system for your needs.
If you’d like a customized assessment of your needs, projected savings and investment requirements for your situation, contact Paul at paul.johnson@comp-mail.com or 303-761-0681 x211 and we’ll have a specialist provide a plan tailored specifically for your requirements.

 

Drowning In Rising Shipping Costs?

By Paul Johnson, President Complete Mailing Solutions


Both UPS and FedEx have announced their General Rate Increase (GRI) for 2017. For the first time, there are differences in how each carrier is approaching their increases. Here are some highlights of the changes shippers will encounter as well as some strategies on managing the increases.For the first time, UPS will be increase the majority of their 2017 rates on December 26th, which will impact shippers with post-Christmas returns.
 

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  • The basic rate increase that averages 4.9% (packages in the 1-10 lb range are typically higher).
  • UPS will now be assessing Additional Handling Surcharges on packages that are 48” or more ion the longest side (from t 60”) on Ground, Air, and International packages.
  • Additional Handling Surcharges will increase $.35 and will now also be applied to UPS’ more economical SurePost packages (packages that ship UPS but are delivered to their final destination by the USPS). The surcharge will go into effect on January 8, 2017.

View a 2017 rate overview here Rates at ups.com
 
 

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  • FedEx will increase their rates on January 2, 2017. The change reflects an average 3.9% increase on domestic U.S. domestic, import and export services.
  •  FedEx is changing their domestic dimensional weight multiplier from 166” to 139” (dimensional weight is calculated by multiplying the length x width x height then dividing by the multiplier – 139).
  • FedEx will adjust their Fuel Surcharge on a weekly rather than monthly basis. Industry experts suggest this indicates FedEx is anticipating higher fuel costs next year and want to reduce the impact on their revenue.

View FedEx 2017 shipping rates here 2017 Rates at fedex.com
 
 

  • The USPS has not announced a specific rate increase but has published tentative structural changes that would go into effect on January 22, 2017

View USPS proposed changes USPS 2017 Changes
 
 

When Does a 1-Lb Parcel Weigh 11 lbs?

No it’s not a trick question but it might depend on the date.

Dimensional pricing has had a significant impact on the cost of shipments because pricing is based on dimensions rather than weight. Essentially a 1-lb package is no longer a 1-lb package!

Consider this:

Cost Comparison of a 12” x 12” x 12” Package Weighing 1 Lb.
Carrier 2016 Billable Weight 2016 Rates – Price* 2017 Billable Weight 2017 Rates – Approx Price
FedEx Ground 11 lbs $15 13 lbs $20
UPS 11 lbs $18 11 lbs $19
USPS 1 lbs $7 1 lbs $7

As rates and surcharges steadily increase, it’s no longer feasible to be lax about how items are packaged and shipped.

3 Tips To Better Manage Rate Increases

It is now imperative that shippers more closely manage their shipments. Here are 3 tips to help you better control shipping costs:

  1. Optimize Package Contents and Packaging
    Package as many items in a single container as possible as well as use the smallest box possible to ship the products. This will not only reduce the cost of packing materials but the actual cost of the shipment.
  2. Rate-Shop All Shipments
    With the divergence of pricing strategies between UPS and FedEx, it is more important than ever to shop for the best rate (especially with weekly fuel surcharge adjustments at FedEx).
    Incorporate rate shopping tools such as NeoShip, ProShip, and EMS that not only identify the best shipping rate but provide greater visibility of your shipments progress.
  3. Dimensional Equipment
    Take the guesswork out of dimensioning each package and identify package size and pricing instantly with a dimensional scale that automatically calculates package dimensions

Contact us today for a Free Assessment of your shipping needs and more ideas on how to better manage them –303-761-0681.

6 Practical Tips To Reduce Shipping Costs Even With Dimensional Pricing

By Paul Johnson, President Complete Mailing Solutions

Whether you ship 2 or 2,000 packages a day, you are impacted by dimensional pricing on all ground shipments that went into effect in 2015 with UPS and FedEx.

FedEx® and UPS® are now enforcing dimensional pricing on all ground shipments, including those weighing less than 3 pounds. Packages that are 3 cubic feet or less are most affected by the change.

For example, the cost to ship a small box of cups weighing three pounds and measuring 17x17x17 inches could jump from the current $8 to more than $18 in January. A 2lb. package of light bulbs with dimensions of 10x10x10 inches could increase from $8 to $10 – a $25% increase (Parcel Industry, June 18, 2014).

What Is Dimensional Pricing?

dimensional package smallDimensional pricing is based on the volume (length, width and depth) of a package rather than the weight. UPS and FedEx instituted dimensional pricing in 2015 as a way to regain revenue that was lost because shippers were using large sized boxes (volume) containing small, lightweight contents. These boxes took more room on their trucks but the cost (based on weight only) did not compensate for the space they took. While this approach helps FedEx and UPS regain significant revenue, shippers are feeling the pinch.

How To Reduce Shipping Fees

    In order to avoid experiencing significant cost increases, every shipper needs to take action. The following are 6 ways to lessen the impact of Dimensional pricing:

    1. Optimize Package Contents
    2. Whenever possible, ship as many items as possible in one box. It is no longer cost effective to pay for “air” when a small item is shipped in an oversized box. Multiple items in each box will increase cost efficiencies.

    3. Evaluate Shipping Containers
    4. Many shippers stock a limited number of carton sizes, then fill any negative space with packing material. However, with the Dimensional Pricing rate structure, consideration should be given to incorporating a broader array of box sizes. Using smaller boxes that reduce or eliminate “air” will not only keep shipping costs lower but will also provide savings on packing material. If you ship a significant number of boxes per day, consider automated systems that fit the box to the contents. These systems virtually eliminate any unused space.

      Another option is to use padded envelopes or Tyvek® bags if they can accommodate the contents of your shipment. These are lightweight, low-volume options that can reduce shipping costs.

    5. Indicate package dimensions on your shipments
    6. Shippers used to have the option of including package dimensions in their shipping systems on cartons that are 3 cubic feet or less. However, package dimensions are now mandatory. Exclusion of the dimensional data could result in a 20% – 100% penalty, depending upon the actual dimensions of the package.

    7. Spot-Check Shipping Rates
    8. With rates being updated on a regular basis, it is important to make sure your rating software is accurate. It is virtually impossible to go back to a customer and try to recover incremental shipping charges, so avoid a potentially a significant hit to your bottom line by doing regular “spot checks” of rates. When you include dimensions in your shipping system, it should return accurate pricing right away. If not, or if it’s too time consuming, contact us at 303-761-0681 for assistance with navigating these changes.

    9. Audit Shipping Invoices
    10. An on-going review of your shipping expenses can help you identify and recover costs. On average, 3% of FedEx and UPS charges are eligible for a refund due to billing errors and late deliveries. Comparing billed vs. rated invoices helps you identify inaccurate rates as well as incorrect billing. Products such as Complete Parcel Audit provide valuable business intelligence to help identify, quantify and achieve all possible cost savings and helps you improve your profitability. Find out more about Complete Parcel Audit at: Parcel Audit

    11. Negotiate rates
    12. There is no better time to negotiate shipping rates with FedEx and UPS in order to better control and manage your shipping costs. Shippers can obtain discounts from 10% to 70% as a result of negotiating fees. Some of the factors that impact rate include:

      • Shipping Volume –this is the sheer number of packages you ship. The higher the number the greater your ability to negotiate a discount.
      • Urban vs. rural delivery points – generally, the more concentrated the delivery area, the more cost-efficient it is to deliver the packages. Some of these savings can be passed onto the shipper.
      • Shipping from single vs. multiple locations – a limited number of shipping locations can be an advantage, especially if you are shipping a high volume of parcels.
      • Delivering to few vs. many destinations – again, this helps focus shipper’s resources and can save you money.
      • Package size variations – having fewer standard package sizes helps FedEx & UPS because they can maximize their loads.
      • Negotiating skill – if you have a strong hand (based on the above), hang tough for higher discounts
      • Keeping the competition in play – don’t keep your eggs in one basket. Shippers may be more motivated to work with you knowing the competition might replace them.

      Generally the holidays are not a good time to negotiate rates. Hold off and initiate negotiations when UPS and FedEx will be more open.

      For more information on ways to manage your shipping costs, call us today at 303-761-0681.

Purloined Packages On The Rise

By Paul Johnson, President Complete Mailing Solutions

I watched the news the other night and saw a video of a woman stealing packages off an unsuspecting homeowner’s front porch. Apparently this was not the first – or last – time she had done this. What chutzpah!

I also watched as apartment dwellers in a major city were complaining they were not able to get their packages from Amazon because there was no room in the apartment’s mailroom for them. Now what?

One of my neighbors told me he saw a couple stealing packages off front porches in our subdivision. They got into a car with the license plate covered up. He followed them but lost them. He found out they crashed into a fence and were caught. That’s one for the good guys!

Unfortunately, these are signs of our times. With the proliferation of online shopping, many mailrooms are overflowing with boxes – to the point that they are unable to accommodate the volume. In fact, mailrooms in many colleges, apartment buildings and other locations are starting to limit or not accept package deliveries. Conversely, consumers in housing developments are often not at home when packages arrive, either requiring a shipper to make multiple attempts to deliver or leaving a package unattended on a doorstep, vulnerable to theft. It’s only going to get worse.

To the rescue: Self-Service Parcel Terminals

parcel lockers
Popular overseas, Self-Service Parcel Terminals are free standing lockers that provide safety and convenience for both shippers and consumers. The terminals are operational 24/7, allowing customers to pick up items at their convenience and shippers can leave parcels in a safe, secure location, eliminating the need for multiple delivery attempts and liability due to theft.

Here’s how they work:

  1. Customers place and order and select the most convenient Parcel Terminal for delivery.
  2. Once the package is delivered, the customer is either emailed or texted a unique code that allows them access.
  3. The customer enters the code on the touchscreen, the code is authenticated and the locker opens allowing retrieval of the package.

Self-service parcel terminals offer a number of benefits:

  • Convenience – customers select the nearest location to pick up their package
  • Accessibility – the terminals are available 24/7
  • Safety – access codes are sent directly to the customer
  • Security – parcels are contained under lock and key, not exposed on a doorstep
  • Time Savings – customers retrieve packages when they choose

Self-Service Parcel Terminals have been around for a decade, most notably Great Britain, Germany, Denmark, Latvia and Poland. We think they solve a need here in the States and would encourage quick adoption.

What do you think?

Ever had a package stolen off your porch? Would you use a self-service parcel terminal? See any downsides to it? Give us your thoughts!