Responding to Global Shifts in Supply Chain and Parcel Platforms Requires Clarity, Analysis, Intelligence

Continuing changes in the end-to-end supply chain, including recent updates in the small-package shipping world, are making headlines this week, and they are adding an additional layer of complexity for shippers that requires closer analysis of package size and transportation strategies as they work to get their product to end customers.

Now as The Wall Street Journal reports some leading providers in small-package shipping services make changes in their shipping program, many companies that utilize parcel shipping practices are realizing that the expense for residential and commercial delivery may not be the same between carriers going forward.

Specifically, comparing shipping rate announcements from national carriers UPS and FedEx reveals a significant divergence in dimensional divisor variables used to calculate dimensional rates and creates contrasts between the two carriers’ application of surcharges and minimum ground charges. These changes complicate shipping processes that have been utilized since the start of dimensional pricing in 2015, when many shippers recognized the importance of a more labor intensive, dimensional analysis of packages beyond weight. In the wake of this week’s news, many shippers are asking questions about the impact of these changes on domestic and international shipping as they compare services to ensure they are providing the best value and delivery experience to their end customers.Responding-to-Global-Shifts-in-Supply-Chain

For every parcel shipper, the change in dimensional pricing strategy and the variance in rate increases between the carriers will become a game-changer. The cumulative effect of these increases on your enterprise is determined by how quickly and effectively you are able to react. Transportation Insight’s portfolio of parcel shipping solutions can deliver clarity, data analysis and the decision-drivers that help you mitigate risk and operational expenditures when the shipping environment changes. As part of our co-managed approach we help shippers understand the operational and financial impacts of new currents in the transportation rate climate, and in doing so deliver the
business intelligence necessary to grow their market share at a time when competitors may be crippled by change.

In light of these significant changes, it is critical that shippers understand how the pricing can vary between the two carriers and how this new dimensional divisor will affect small package shipping expenses going forward. And because many shippers often pass shipping expense along to the consignee, failure to capture true dimensions of the package – and understand the carrier-specific dimensional divisor – could mean that only a portion of the total shipping cost is passed along. This not only jeopardizes company profit, but it also creates significant challenges for properly determining the total landed cost for a particular order.

Ahead of the 2015 implementation of dimensional weight pricing for UPS and FedEx, I discussed dimensional weight basics and best practices in a blog here.  Now, in the wake of this divergence between FedEx and UPS, it is more critical than ever for shippers to closely evaluate their packing practices and their carrier alignment.  Enterprises who partner with Transportation Insight leverage our multi-modal solutions for complete end-to-end integration.  By linking all transportation modes (Parcel, LTL, Truckload, International), shippers leverage the entirety of the supply chain for increased efficiency and performance to better serve the customer.

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