Cost inflation and the shipping bubble – how to come out on top

Cost inflation and the shipping bubble – how to come out on top

Thanks to a shipping bubble and large-scale cost inflation, right now is the ideal moment to optimize your packaging, shipping, labor, transportation and warehouse. Why? The simple answer: it’s alway wise to optimize, drive efficiencies and deliver cost savings with a good partner. But right now is the ideal moment as the market levels or even looks to turn. Learn from the trucking recession The demand for goods has exploded as the economy has recovered and expanded. A record strong recovery has happened on the back of the 2015 trucking recession. That recession meant layoffs and idle equipment. But the opposite is now the case. In the shipping world, record high demand for goods and shipping, has driven demand for vehicles and drivers sky high. That, added to rising fuel costs, continued general rate increases, higher dimensional charges and market instability is signaling a change in market direction. All of this makes optimization of your packaging through rightsizing more vitally important to the health of your organization. You need to get more cost effective than ever before. Smaller packages translate directly to lower transportation spend and higher profits. Get ahead of cost inflation – and the competition Don’t be fooled by flatbed demand charts, the most accurate indicator is the Cass Freight Expenditures chart, which indicates that spending on shipping is still at an all-time high. And you know that prices won’t come down for quite a while after the true peak is found. But don’t get complacent. Now is the time for action. Do you want to keep paying higher prices to ship air? Wouldn’t you rather trim...
Dimensional pricing is here for the long haul

Dimensional pricing is here for the long haul

Shipping is more complicated today than ever before. The adoption of dimensional pricing based on size (or cube) of shipping containers has been a game changer for the industry. But many companies have been slow to adjust their packaging operations to address the new reality. Lack of expertise doesn’t have to be an obstacle. Find a good partner and start cutting costs. Why dimensional pricing is the new industry standard Air freight relied on dimensional weight pricing for years because the amount of space available on planes was a more important factor than the weight of the parcels carried. For ground transport, traditionally, weight was a more important factor in cost as the sector was largely defined by business-to-business delivery to a limited number of destinations. The explosion of e-commerce changed all of that. As more and more lightweight packages have entered into circulation, ground carriers have been forced to contend with the problem of space—not simply weight. The solution: dimensional pricing. Dimensional pricing affects your bottom line Dimensional pricing means that shippers are now paying for space on the truck, not just the weight of parcels. So inefficiencies in your packaging directly affect your transportation and delivery costs. Two main factors lead to higher dimensional pricing: Packaging that is too large – when you stuff your packages with ”air” and filler material you are now spending money on that wasted space Poor configuration – arranging products in a configuration that leads to a higher volume (and therefore dimensional weight). Flatter is often better but each configuration should be based on the specific products being shipped Companies that we’ve...
The IKEA model – packaging is your product

The IKEA model – packaging is your product

Are you giving your packaging enough thought? Let’s consider the example of IKEA. But first, let’s think about packaging in general and where the opportunities for growth are in your operation. Think about your business model, products and supply chain. From concept to customer you are the experts. But how much thought do you give to how your product is packaged and shipped? Proper packaging optimization makes it possible to get your product to your customer in the fastest, most reliable and least expensive way—protecting not only your bottom line but also your customer relationships and your reputation along the way.     Additionally, right-sized packaging lowers your transportation costs. As more carriers continue to move to dimensional (volume-based) pricing rather than weight, the wrong package size means you are paying to ship air. The problem is: you can’t sell air. Why are you shipping it? And packaging optimization also creates opportunities to reduce labor costs per unit by reducing movement, touches and handling. IKEA – proof that packaging is your bottom line Efficient packaging is so important to eliminating costly waste that some companies like IKEA actually redesign their products to cut costs and optimize the product’s storage and shipping. In 2015, for example, IKEA announced big growth plans aimed at increasing global revenue by 74% by 2020. A significant part of that growth was to come from selling more products through its existing stores, which meant finding ways to cut prices to move more volume.     As an aside, we’ve all seen examples of really awful packaging from companies like Amazon. But don’t take that as...
Amazon’s packaging optimization tidal wave

Amazon’s packaging optimization tidal wave

For years, we’ve been telling anyone that will listen that packaging optimization is a must. But not only packaging optimization; transportation, warehouse and labor optimization too. “Get on board or you will get pushed out,” is the phrase we repeat to clients, competitors, investors and friends. Well, Amazon is about to make this a lot more real. If you’re not using optimized packaging by August 2019—just 10 months from now—you stand to lose money Don’t believe our take? You don’t have to. Here’s what industry experts have to say about the new program. Frustration Free Packaging? Amazon put a whole online experience together to get you excited about the concept. But don’t be fooled—there’s nothing nice about what Amazon is about to do to your profit margin if you don’t get onboard. Here’s what Jacquie Patterson (featured in the video), had to say about “Switching to Frustration-Free Packaging: “We can see a savings of up to 50% or more in material usage and in shipping volume.” In the 10 years since Jeff Bezos started the Frustration Free Packaging initiative in 2007, Amazon has eliminated more than 500 million boxes and more than 244,000 tons of packaging materials through 2017. And good for them, they are leading the charge to save pack material, lost warehouse space, the shipping of air and wasted man hours too. In 2017 alone, Amazon reduced its packaging waste by 16%, the equivalent of 305 million shipping boxes. But the message to industry has been “…we’re just getting started.” The aim of the Amazon FFP program Differentiate and optimize the customer’s experience Minimize the environmental impact of...
Get your pick, pack and ship in shape for Cyber Monday

Get your pick, pack and ship in shape for Cyber Monday

2017 Cyber Monday broke records—are your logistics operations ready for 2018? According to Forbes, Cyber Monday 2017 was the largest online sales day in history with $6.59 billion in sales—a 16.8% increase year over year. And while Cyber Monday is a phenomenon into itself, the entire shopping weekend, from Thanksgiving to Cyber Monday broke records last year. According to SupplyChain247, during the four day shopping window merchants shipped orders that traveled globally 12.6 billion miles to reach customers—more than 10 times the distance from the earth to Saturn. Cyber Monday event taxes industry leaders. UPS typically handles 19 million packages a day but during peak holiday season the number jumps to more than 30 million packages a day. Last year, UPS hired around 95,000 seasonal employees to help manage the demand–and even then they had trouble keeping up. According to Fox Business News, because of the “unprecedented surge” in online orders, UPS was forced to increase transit time by several days on an unspecified number of deliveries. They also were forced to raise the hours drivers worked at more than 100 package-delivery centers where demand was the highest.     Amazon also announced that Cyber Monday 2017 was the biggest shopping day worldwide in company history noting that customers ordered hundreds of millions of products throughout the weekend, with 140 million items bought from small businesses. Getting your logistics in Cyber Monday shape A sudden and huge surge in demand can tax even the best prepared companies. So how are you preparing for Cyber Monday this year? SupplyChain247 outlines a few considerations for the logistics industry noting that shippers must...
Packaging & Logistics Solutions at Parcel Forum 2018

Packaging & Logistics Solutions at Parcel Forum 2018

Parcel Forum 18 – Don’t miss PLS booth #344 The PLS team is at the Parcel Forum to talk about how to save you money with packaging optimization, transportation and dimensional charges, our software, and more. Make sure to stop by the PLS booth #344. This year we’re giving away a 40-inch flatscreen T.V.! Stop by booth #344 or sign up now to enter your name in the drawing and receive the PLS monthly newsletter. OBI can help you Orange Box Intelligence is a program we have developed to help e-commerce and other industries drive sustainable efficiencies in their packaging, transportation, labor and warehouse operations.  Our formal suite of performance management solutions includes; packaging optimization, transportation optimization, labor optimization and warehouse space optimization. Our dashboarding capabilities will show & validate your current state, clearly articulate your leaner future state and allow you to monitor savings indefinitely. PLS will continue to work as an extension of your company to ensure positive results. PLS and Shipware collaborate At this year’s forum we are co-presenting with our strategic partner Shipware. PLS team members will share their expertise during a short, informative presentation. We will also be there to answer any questions you might have after the session is over. If you attend, let us know on social media – tag our channels and use the conference hashtag to get connected and let everyone know what you took away from this year’s forum. PLS presentation date and time: Tuesday, September 25th 11:00 to 11:50 a.m. 401-402: EXCLUSIVE Live Parcel Pricing & Procurement Practices Benchmarking   About PLS We are packaging and supply chain optimization experts. PLS can help you develop greener packaging and reduce...