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UPS 2022 peak season rates announced

2022 UPS Peak Surcharge Takes Aim at Large Packages

With the 2022 UPS peak surcharges published, all three major carriers have announced their holiday plans. We’re seeing a focus on heavy parcels and shippers with high volumes. Home deliveries are in the crosshairs, but that doesn’t mean your profitability […]

Drayage truck

What Is Drayage?

We live in a multi-modal world. Before a product arrives on your customer’s doorstep, it has probably traveled on several different modes of transport before and after eCommerce fulfillment packaged and shipped the order. One of those was undoubtedly drayage. […]

The Red Stag Fulfillment warehouse in Knoxville, Tenn.

Depot vs. Warehouse: Which Should You Be Using?

The question of depot vs. warehouse is often one of semantics. What matters most is finding the right partner to meet your needs and help you grow. A depot can be a warehouse type, but that’s not how the term […]

Shipping containers

Do You Need a Freight Forwarder?

Using a freight forwarder is similar to working with a 3PL for your eCommerce fulfillment. Both add expert professional services to your supply chain without the hassle of hiring, training, and supervising in-house staff. Here’s what you need to know […]

eCommerce Growth

11 Tips for Scaling Your ECommerce Business 

You’ve developed a terrific product line and created a website. You’re selling your products on eCommerce platforms like Amazon, eBay, or Etsy. You’ve got your eCommerce fulfillment in place, and you’re starting to build a base of repeat customers. So […]

direct fulfillment

How Your Business Can Grow Using Red Stag Fulfillment

Good eCommerce fulfillment is a kind of silent partner: Your clients won’t mention it directly, and you might not give it much thought, but it’s the quiet engine that powers growth in your online store. At Red Stag Fulfillment, we’ve […]

New York City

Should You Use a New York 3PL?

New York, NY, is the largest city in the United States and one of the biggest markets in the world. The city is home to 8.4 million people, and another million workers commute into the city for work. The larger […]

FedEx has announced its 2022 peak rates

FedEx 2022 Peak Season Surcharges Unveiled 

FedEx has announced its 2022 peak season surcharges and pricing, giving businesses like yours the time to prepare your Q4 budgets. While the increase doesn’t come as a surprise, it does arrive as many companies face increasing price pressures and […]

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Dimensional Pricing

What is dimensional pricing? Will it be the end of your business?

On January 2, 2015, FedEx and UPS changed how they will price shipments. We detail how this could greatly increase shipping costs for e-retailers and other businesses that use companies like FedEx and UPS to ship their products.

In addition, we breakdown why the carriers are making the change and provide examples of how the new calculations work.

Lastly, we provide possible solutions for companies that would like to reduce their shipping costs and help minimize the impact that could come from dimensional pricing.

Transcript

  1. Will It Be The End of Your Business? WHAT IS DIMENSIONAL PRICING?
  2. How does pricing work now? The historical way for calculating costs to send a package was based on a very simple method; Carriers use a table that assigns a “base rate” for every combination of weight (1-150 lbs.) and distance (Zones). The heavier the package and/or the farther you ship, the more it costs. Other surcharges and fees are then added to the base rate as they are applicable (E.g. fuel surcharge).
  3. Does it work? Historically, this pricing structure was ideal because transport trucks could use these same variables in their formulas to calculate transportation costs, and therefore determine the profit margin for each truck transporting goods.
  4. What is dimensional pricing? In other words, many of the lightweight packages you ship today could see A BIG INCREASE IN COST!!! Every package you ship will now have two weights – actual weight and dimensional weight. The larger of these two will be used to calculate the cost of your shipment (Height x Width x Length) Dimensional Factor* = Dimensional Weight * The standard Dimensional Factor that UPS and FedEx will use is 166
  5. Why the change? The convenience of online shopping with in-home delivery, has resulted in an increase in the number of lighter weight packages in bulkier boxes being shipped to homes across the world. Consumers now purchase bath robes and teddy bears online! Bigger boxes take up more room in a truck; so less space and less weight = less revenue per truck for the carriers.
  6. How will this affect my shipping cost? 3 lbs. x Zone 8 $9.84 Base (Daily Pickup) Rate 3 lbs. package shipped in a 12” H x 12” W x 18” L box From: Knoxville, TN (ZIP 37923) To: Reno, NV (ZIP 89501) TRADITIONAL (12 x 12 x 18) / 166 = 15.6 lbs. 16 lbs. x Zone 8 $18.86 Base (Daily Pickup) Rate DIMENSIONAL
  7. 3 Questions to Consider What will my margins be if I eat the cost? If I pass this cost on to my customer – how many will I lose? Will I still be in business 1 year from now?
  8. Solutions Take the Air Out Negotiate your dimensional factor Find a partner with negotiating power (E.g. a 3PL)
  9. Take the Air Out Deliberately engineer packaging to remove as much “air” as possible. If additional packaging is added when preparing to ship, educate your packing team on the effects of their decisions. This should be the first step for any company looking to avoid large dimensional weights You might be surprised how much opportunity there is
  10. Negotiate Dimensional Factor Larger Dimensional Factor = Smaller Dimensional Weight = Less Effect on Your Business Must negotiate with each carrier you use (i.e. FedEx and UPS) There are no guaranteed outcomes Shipping Revenue = Power
  11. Find a strategic partner Quality 3PL fulfillment operations minimize effect to their clients Strategic Partners help with these various strategies Examples: Negotiating power with Carriers Package consolidation Packaging engineering
  12. FOR HELP REDUCING COST OF DIMENSIONAL PRICING 800.815.STAG (7824) info@redstagfulfillment.com www.redstagfulfillment.com

We know what it's like searching for a fulfillment partner...

We've been there before! Red Stag Fulfillment was born out of necessity as the sister company to support a fast growing ECommerce business. You can read more about the story of our development here.

Our business is being the successful extension of your business, and a big part of that is providing tools to help you evaluate us, and other fulfillment companies. That's why we openly share our Fulfillment Provider Questionnaire, as a tool for you to use when selecting your fulfillment partner.

Download a blank questionnaire, or the questionnaire with our answers for your own internal use.

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