How New Pricing Systems Will Reshape Logistics Companies in 2015

Published : February 4, 2015

price-tagIn the digitally-driven modern workplace, logistics companies have always been something of a workhorse— the strong, dependable backbone of customer fulfillment.  And it was a workforce that didn't typically have to wrestle with the incessant, fleeting changes their office counterparts contended with following every software upgrade and Google update. Yet when the rare sweeping change does come down from major fulfillment companies, the entire landscape is radically altered. What was once simple and straightforward becomes a very pressing issue to solve—one that the business suddenly hinges on.

In 2015, this specter has taken the form of dimensional weight calculations, and to say that things have changed behind the warehouse doors is an understatement.

Thinking Outside the Box— Literally

Now that both UPS and FedEx are beginning to tally shipping costs on new DIM weight pricing, the box or packaging you're using to ship your items has real potential to become a serious pain point for margins. If your trade is in bulky but lightweight objects, expect to hit a major bump in the road in your shipping spend; one that you'll need to either absorb, reduce through compressing your items, or pass on to the customer.

Shipstation blogger Erika advises that businesses dealing with items that don't need a box, such as clothing, might even want to consider switching over to poly bags or envelopes to sidestep the now-higher cost. For those that do still need boxes, expect to see more solutions like startup boutique logistics provider Shyp, a company which incorporates a unique to-item-size custom box machine in their service offering.

Expect New Packaging Innovations

The focus on packaging inclusions— peanuts, air pillows and so on— up to this point has usually been on padding the box around item they surround, without a lot of thought given to volume. While it's unlikely feed chutes of foam peanuts will completely evaporate from their perch above warehouse packing tables, the sudden appearance of a new need in logistics services is bound to draw innovators. Expect to see a lot of compressed foam or mold-to-fit solutions focused more on tightly surrounding an item itself, rather than the void left in a box. Likewise, with less of a void and subsequently less padding, the sales for both shipping provider and third-party insurance will likely see an uptick as logistics professionals hedge their bets against rough handling.

The Second String Could Get Their Big Break

Typical of any major change in a necessary business component, some organizations will seek their solutions outside of traditional providers, rather than adapting to them. While UPS and FedEx are unquestioningly the big players here, the USPS, DHL, domestic fulfillment providers, and various conceptual logistics startups will undoubtedly start positioning themselves to welcome these new potential customers. Now that the big two have changed their game plan to be less enticing across the board, there's more room than ever for smaller or lesser-known logistics providers to make their big break, according to Paul Demry of Internet Retailer.

Businesses are in an excellent place to be wooed at the moment, and those considering a change of logistics companies would do well to demur a bit and hold out for promotional offers or bulk pricing.

With DIM weight pricing shaking things up in 2015 and beyond, e-tailers and manufacturers of all kinds are going to be forced to take a good, long look at the way they're currently approaching logistics services and adjust accordingly. Ultimately time will smooth the bumps in the road, but the more intelligent and predictive the solutions implemented now, at the turning point of these considerations, the better the results will be in both effort and cost over time.

Depending on how well a given business course-corrects to eliminate packaging volume waste, your solutions for DIM weight pricing might even turn out to be the point of difference that elevates you above the competition.

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Topics: Supply Chain Logistics

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