Daily Archives: November 23, 2010

U.S. Small Package Courier Costs Skyrocketing on January 3, 2011

Small businesses and businesses that rely heavily on couriers (for document bundles and demo equipment transport) be warned! On January 3, 2011, both FedEx and UPS are decreasing the divisional factors used to calculate dimensional weight for Ground and Air packages that are 3 cubic feet (5,184 cubic inches) or larger. The factors will decrease from 194 to 166 for shipments within the US and from 166 to 139 for international ground shipments to Canada.

You’re probably thinking what’s the big deal? That’s only a 1.17% change for in-country packages and a 1.19% change for packages to Canada? Right? Well, yes and no. Mathematically, the change is small, but you have to remember that couriers charge based on dimensionalized weight and the price increases approximately linearly with weight. Thus, as per this article in MultiChannel Merchant (that deserves a hat-tip for being among the first to pick this up) if you have a large parcel with an actual weight of 6 lbs (with a list rate of $29.50) that used to dimensionalize to 14 lbs (with a list rate of $55.90), it would now dimensionalize to 16 lbs (with a list rate of $65.40), which increases your cost by 17%.

In other words, unless you can “grandfather” in the current dimensionalization factor into your renewal agreements, your shipping costs could easily go up by 15% to 20% across the board as a result of that 1.17% change in the dimensionalization factor.

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Logistics Carriers: Black Boxes are Coming

As per this recent article over on Logistics Management, all five leading U.S. trucking companies endorse EOBRs for commercial trucks. The rationale: to verify legal duty status of their drivers.

Schneider National, U.S. Xpress, Hunt Transportation Services, Knight Transportation, and Maverick USA are endorsing the “Commercial Driver Compliance Improvement Act” (S. 3884) put forward by Senators Mark Pryor (D-Ark) and Lamar Alexander (R-Tenn) which, if passed, would require (commercial) trucks have electronic on-board recorders (EOBRs) within three years. The companies have formed the industry coalition “Alliance for Driver Safety & Security” to urge Congress to pass legislation designed to improve highway safety.

The alliance believes that EOBRs will improve safety on our nation’s highways by applying technology to document driver compliance to the hours of service rules because early evaluation of the Comprehensive Safety Analysis (CSA 2010) data suggests that carriers with higher levels of hours of service compliance have lower crash involvement.

But will they really verify legal duty status? And, more importantly, will they really improve highway safety? If your truck has two drivers, will a box tell you who was driving? And if a driver really wants to push through, I’m sure it won’t be long before someone figures out a way to bypass them, just like your best car thief can bypass any car alarm or lojack in 60 seconds (or less). But more importantly, how will it directly improve highway safety. While it’s true that a tired driver is more likely to get into an accident than an alert driver, how is a black box going to determine if a driver is tired or not? Every driver is different. If the driver didn’t sleep the night before due to illness or personal stress, the driver might tire in just a few hours on a crowded highway. But if the driver got a great night’s sleep, is rested and relaxed, doesn’t have to deal with demanding driving situations, and breaks every few hours, he or she might be able to easily drive 12 hours in a day, especially if he or she gets the next day off.

While I’m all for safety, I can’t help wondering if there is an ulterior motive by some of the bigger players to bankrupt the smaller players. These boxes are going to cost at least 500 per truck, and there are going to be installation, maintenance, and training costs on top. This could break a small carrier operating on a razor-thin margin, and offer no additional security or safety if the carrier’s drivers are professional self-conscious drivers who always obey the rules and keep good books.

But what do you think?

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