Beginning in 2015, two global shipping companies will change their pricing models, expanding their use of dimensional (“DIM”) weight pricing. This could result in substantial price increases for many shippers. In order to keep your business’ operating costs down – and ensure you are getting the best price – it’s time to get smart about shipping.
Here are three questions you should ask about your current fulfillment operations:
What is DIM weight pricing and how is it calculated?
The concept of DIM weight is used by the transportation industry worldwide as a measure for establishing a minimum charge for the cubic space a package occupies. Most companies use DIM weight pricing to varying degrees, but calculate and apply it under differing conditions.
FedEx Ground® and UPS® Ground’s restructured pricing plan for domestic ground shipments in 2015 will utilize DIM weight pricing on packages less than 3 cubic feet. This means shippers will be charged whichever is greater, the actual weight or DIM weight. Parcels less than 3 cubic feet shipped via FedEx Ground® have previously been exempt from DIM pricing – you were charged according to actual weight.
These changes are likely to result in substantial price increases for many shippers. Sharing an example published by the Wall Street Journal, a 1 lb. square package with 12-in. sides is currently priced by weight and costs $6.24 to ship the shortest distance. In 2015 using DIM weight pricing, this package would cost $8.83 for the same distance, a 41 percent increase.
How can I avoid having to pay higher costs?
Now is the time to re-evaluate the criteria used to determine your unique shipping needs. Choose a shipping provider that offers a spectrum of reliable shipping options so that you can select the price and service level that best meets your needs. This can also help give your business a competitive advantage by passing the shipping cost savings on to your customers.
Some shipping companies may box you in by expanding their use of DIM weight pricing, but the United States Postal Service® can craft a solution to meet your needs instead of making you change. For example:
- USPS offers several outbound and return pricing options that can provide great savings, like ounce-based pricing or weight and zone pricing .
- USPS’ Merchandise Return Service offers low rates for variable-volume returns, with no minimum volumes threshold and no expensive call tag fees.
What other ways can I save?
Order free shipping supplies, like the Priority Mail Shoe Box and other Priority Mail Boxes and Envelopes, available at USPS.com. Priority Mail includes free $50 insurance coverage with most shipments as well as no fuel surcharges, residential charges, or rural charges and offers easy-to-use package pickup. Are you being charged a Saturday delivery surcharge? USPS delivers on Saturday at no extra charge. Over the course of a year, those “no surcharge Saturdays” are like getting six weeks of additional delivery days for your customers.
This article was contributed by Cliff Rucker, Vice President, Sales, United States Postal Service®. Cliff oversees the direction and management of the Sales organization, including market competitiveness, business development, and sales for all commercial mailers, including small, mid-sized and large businesses.