PACKSmart: The Changing Landscape of Package Distribution

In the upcoming year, two major package carriers plan to make changes to how they calculate ground shipping costs to their customers. Our experts make observations on how the changes may effect manufacturers and retailers.

Post holiday shopping season, two major package carriers, UPS & FedEx, plan to make changes to how they calculate ground shipping costs to their customers. Going forward, the charge for ground shipments will be calculated based on size/dimension of a package, not just weight alone. According to experts, this could mean that an oversized box of paper products that once cost less than $10 to ship ground could now cost more than double to ship.

Why are companies moving to this change?

The goal for companies like UPS and FedEx is to reduce their costs (i.e. labor and travel) by discouraging retailers from shipping products in oversized packaging that lead to limited space in delivery vehicles. Also, an increasingly high demand for low-cost shipping services that carriers like UPS and FedEx has also found it difficult to keep up.

How will the change affect manufacturers and retailers?

Product manufacturers and retailers will be forced to re-assess their packaging designs and look for ways to optimize. 

The most obvious optimization relates to package volume.  Once the changes take place, you will pay a premium for wasted space in the supply chain.  Distribution testing can be used to validate that redesigned packages will still withstand the rigors of the supply chain.

A less apparent optimization practice is the modification of the performance requirements.  Standard distribution test are used to set a minimum performance required by a package.  These testing have an inherent safety factors.  As package’s are optimized, the safety factors built into these standards may introduce barriers.  With expert consultation, the levels can be adjusted giving you the control to manage your risk of damage.

When will the change take place?

Both companies plan to wait until after the hurried holiday shipping season. UPS will change over to dimensional-package pricing beginning December 29th while FedEx will make the change on January 1, 2015.