Smarter Mode Planning, Part 2
With the supply chain currently racing to keep up with demand, it’s a great time to inject some advanced math into your process to make sure you select the right mode for every order. In Part 1, we talked through the implications of smarter mode selection. Now, let’s get into some examples of just how complex it can get.
Weight isn’t Weight
As mentioned previously, carriers have a somewhat dynamic opinion about what “weight” is. For every parcel order, if the dimensional weight is greater than the actual weight, dim weight is what the price will be based on. This has interesting implications for box selection, but what if it’s a big multi-item order and we have the option of choosing a different pricing model entirely? We could, for example, consolidate all the cartons in the order into a Large Package.
A package is considered a “Large Package” when its length (longest side of the package) plus girth [(2 x width) + (2 x height)] combined exceeds 130 inches or its length exceeds 96 inches.
Large Packages are treated a bit differently than normal cartons. For UPS, they’re subject to a minimum billable weight of 90 pounds, plus a $100 commercial or $120 residential surcharge. Seems expensive right? Well, consider this imaginary order, where X many cartons is the cheapest way of shipping this order normally and will cost $300. I can instead opt to (or have Paccurate decide to) consolidate everything into a Large Package, and see that the cost drops to $260.
Let's look at an example of how tricky this can get. Consider the following order, where in zone 2 it's cheaper to ship it in 9 smaller boxes.
However, in zone 8 it suddenly becomes cheaper to use 2 Large Packages:
As you might imagine, finding these cost breakpoints requires some specialized algorithms to be running for every order.
Weight, What?
The plot thickens when you consider the aggregate weighted services offered by UPS and FedEx. FedEx multiweight (MWT) and UPS hundredweight (CWT) for particularly heavy orders. These pricing models charge a fee per pound that an order weighs, and can cut your cost significantly because some shipments less than 200 pounds, which is the minimum standard weight for CWT/MWT to kick in, may be more economically rated as 200 pounds. This is called deficit weight rating It does add some quirkiness to your expected spending though, especially since usually we’re aggressively trying to lower the billable weight of a shipment.
Luckily, the carriers will automatically apply Large Package pricing on relevant shipments, so you likely won’t have to worry about it too much, except during planning or quoting earlier in the order order process.
Yet another pricing option that UPS offers is Ground with Freight (GFP). This service basically applies LTL rates and discounts on parcel shipments but is subject to tariffs and other charges. Think pseudo-LTL with individual package tracking and no minimum charges for each box in the shipment. For the purpose of this article we’ll consider this service as one of the parcel aggregate services.
To Pallet or Not to Pallet
Considering the above, deciding between parcel and LTL is a bit more complicated than comparing one against the other. For simplicity’s sake you may be tempted to err on one side or the other. But which mode will subject you to more accessorials? Based on the specifics of the order, an important factor could be whether or not the order is being delivered to a residence. To truly find the most economical mode, a veritable buffet of cost factors need to be considered for every order:
Standard parcel
Parcel Accessorial
Parcel Aggregate services (CWT/MWT)
LTL, all your LTL carriers, regional/local carriers you might have in your porfolio
LTL accessorials
…and all the ins and outs therein. That’s a lot to consider, and the catch is that before you start getting quotes or rate shopping, you have to know ahead of time how a shipment will be packed in order to truly find the cheapest price. That makes cartonization logic a requisite step toward correctly selecting the mode and carrier.
Because the Paccurate API can be implemented anywhere in a lightweight fashion, it can unobtrusively augment your shipping system and other freight tools. Try the API free, or ask us about our Cartonization Readiness Workshop, and we’ll show you how to supercharge your carton selection process so you can start making smarter mode choices.