Have You Compared Your 2015 Shipping Invoices to 2014 Lately? You May Be Surprised
A large portion of online businesses are still unaware of what dimensional weight rating is and how it works, even though the FedEx and UPS new dimensional rating programs may be taking a huge bite out of their profits.
Endicia recently surveyed over 700 businesses to understand how they felt about the FedEx and UPS dim weight pricing and found that 28 percent of online businesses surveyed hadn’t heard of dimensional weight pricing.¹
This means many businesses are unaware of just how much their freight bill can or already has increased. Lightweight shipments present some of the biggest spikes in shipping costs. For example, the Wall Street Journal estimates that under the new pricing model, shipping an eight-pound, 32-pack of toilet paper between 601 and 1,000 miles will increase by 37%.² Industry estimates predict that roughly one-third of shipments will be impacted by this change.
Additionally, 74 percent of businesses disagree with dimensional weight pricing because they believe it is expensive and unfair to businesses and shippers. So what do businesses plan on doing now that they are faced with these price hikes?
Going postal: 80% say they will use the U.S. Postal Service® for their larger, lightweight packages.
Unlike FedEx and UPS, The U.S. Postal Service (USPS) did not increase shipping costs in January 2015. In fact, it reduced Priority Mail rates, making it an affordable option for businesses to ship heavier packages, up to 40 pounds. Lastly, the Postal Service does not apply dimensional weight pricing to packages up to one cubic foot in size. For more details, see ADSI’s recent blog about USPS 2015 Proposed Pricing. For more results from Endicia’s survey, check out the infographic here.
Easy Solution: Add USPS to Your Multi-Carrier Shipping Software System
Now is the time to evaluate your shipping costs, carrier portfolio and your shipping software system’s ability to automatically compare USPS rates and services with your other carriers. You may also want to consider adding regional carriers for certain areas of your customer network, as these carriers may offer rates/services as much as 40% lower than national carriers’ rates. For information on how regional carriers can support your business, download ADSI’s whitepaper, “Regional Carriers: A Sound Shipping Strategy for Competitive Advantage.”
As always, if you have questions about optimizing your carrier portfolio so that you can compare all carriers/services on one shipping system, ADSI is here to help. Contact us today for a complimentary consultation.
¹ Jessica Foth, “The Results Are In: Businesses Say They’ll Switch to the USPS Due to FedEx and UPS Dimensional Weight Pricing,” Endicia Blog, 1/21/2015.
² Maria Haggerty, “How Retailers Can Adapt to Dimensional Weight Pricing Change,” multichannelmerchant.com, 9/15/2014.