The Dimensional Price Increase: Did We Bring This on Ourselves?

Back in January, Brandon Brooks—VP of Strategy and Marketing—wrote an article for our blog about the differences between e-Commerce and fulfillment, and how it was affecting the shipping industry.

You may or may not remember, but the big packaging news story at the time was the huge number of last-minute Christmas gifts that were unable to be delivered in time. In a lot of ways, the big two shipping companies got a bum rap whole fiasco.

As Brooks said:

Lost in the anger and media hoopla was the fact that there was a 37% increase in orders placed during the last weekend before Christmas, as well as a growing population that is unable to distinguish between the online world and the real world. Neither UPS nor FedEx forecasted such an increase, and the volume overwhelmed their truck and air fleets. Remember, you can’t just go out and hire 50 more planes and pilots at the last minute. Physical infrastructure takes years to build and fine tune and must be deployed in a semi-consistent state in order to get an acceptable return on investment.

Even though we can’t really blame shipping companies for being unprepared for the sheer volume of packages, weather issues, or large numbers of orders being placed on December 23rd, it shouldn’t be surprising that they decided to look into solutions to prevent this from happening in the future.

We saw a 37% percent increase in orders placed during the last weekend before Christmas. Increasing fleet size by a similar percentage for one weekend is not a feasible option, so shippers have no choice but to figure out how to put some of the extra growth we’re seeing into their already existing infrastructure.

Packsize studies have found that 40% of the space inside the average box is empty space. It’s not a huge assumption to say that shipping companies know this as well, and have logically decided to punish e-retailers and other groups that have historically shipped a lot of empty space by passing on the costs of oversized packaging on to them.

It’s probably not a permanent fix, given how much volume is projected to go through shipping companies in the future—but it is a necessary one. After all, imagine how many more packages could have been shipped if these companies’ trucks and planes had an extra 40% of space to work with.

In the near future, getting rid of that spare 40% empty space is going to become a very high priority for e-retailers.

Related Article: Dimensional Rates and Breaking the National Motor Freight Classifications Paradigm