It has been a little over a year since FedEx and UPS began dimensional weight pricing for small parcels. But has it made any difference in how companies are preparing their packages for shipment?
As a brief refresher, in January 2015, both UPS and FedEx began charging for shipments based on the carton's dimensional weight, or "dim weight," which is determined by a formula that considers both the weight of the parcel and its dimensions. The carriers had previously used dim weight pricing for larger cartons, but now smaller parcels are affected. UPS and FedEx sought to reduce the number of cartons they move that are much larger than the products they contain. These parcels occupy a lot of space on their trucks, meaning that many vehicles were cubing out long before they would reach maximum weight capacity. The carriers want to ship products, not air.
So, now that the industry has been under the dim weight model for over a year, has it affected packaging? To answer this question, I turned to our good friend and packaging guru Jack Ampuja. Jack is with Supply Chain Optimizers, a company that helps businesses right-size their packaging, and he also teaches supply chain management at New York's Niagara University.
Jack's response was that he feels there has not been the huge change in packaging the industry expected. "I think managers just don't know what the heck to do. They know they need to do better, but it is complicated," he says.
Jack has talked to a number of people, but there appears no obvious trend. Some companies have just come off of previous contracts with their parcel carriers, so the rates may not yet have had much of an effect. Others see the complexity of additional box sizes as more than they wish to tackle right now. They don't want to disrupt their packaging lines and processes. It seems many companies are either absorbing the extra costs or passing them along to their customers directly or indirectly.
As Jack and I discussed the topic, we realized that further study needed to be done on how dim weight pricing has affected shipping behavior. And who better to do that than all of us—Jack, Dr. James Kling of Niagara University, DC Velocity, and you, our readers? Therefore, beginning this month we are undertaking a study on how you have (or maybe have not) adjusted to dim weight pricing, and specifically, how it has affected the way you prepare and handle your packages.
Look for e-mails from DC Velocity in your Inbox, and please take a few minutes to respond to the survey. We will publish the results later this year. Thanks in advance for your help.
Gartner, Inc.