We became aware of a significant change in the freight world, at a recent quarterly meeting with Core Products. We thought it would be beneficial to share this information with you.
Core Products & their customers will see a significant increase in freight cost next year due to the way FedEx & UPS will be calculating freight. They will start calculating freight based on Dim weight prices versus actual weight prices (refer to the links below for more information). Core sells orthopedic pillows that are bulky & light weight. Their most popular product will go from a 10lb actual weight to a 33lb dim weight which means the freight cost doubles!
Due to the impact on Core, they have created a team to deal with the issue. In coming up with a team name, they settled on the acronym PIST – short for Price Increase Solutions Team (it appears the team’s sense of humor is at play in the naming as well). This team is proactively evaluating their current packaging, looking for creative packaging solutions, determining programs that will save their customers money in shipping. They are also aggressively negotiating with FedEx & UPS to increase their Dim Factor, increase the discount off the published price, and waiving additional charges.
If you haven’t already, we suggest you see if this new policy will impact your company.
The following excerpts and links to FedEx and UPS news releases, are taken from a communication Core Products sent its customers:
FedEx <news release> and UPS <news release> have announced a major change in the way they will be calculating shipping costs for all shipments. The new rates will be calculated using dimensional weight or DIM weight. This means shipping rates will be determined by calculating a minimum billable weight based on the length, width, and height of the box. The final rate is based on the higher of the DIM weight or actual rate.
WHAT CAN YOU DO?
The best thing you can do is to educate yourself on these changes and understand how they will impact your business.
· Get to know your FedEx and UPS Reps and start asking questions
· Get to know your local postmaster and compare the cost to ship using the USPS
· Look into increasing order sizes and shipping via a LTL carrier
· Check with regional carriers for local deliveries
· Whenever possible, combine heavier items, with large bulky items.