Jump to content
ipmsusa2

FedEx Rates Going Up...Way Up

Recommended Posts

As long as reality is causing a bout of depression, here's the latest bit of price gouging. FedEx has announced that starting next January, they will be calculating the shipping costs of

ground packages the same way they do air...by package dimensions. And you can be sure that UPS will follow suit. Why? Because when a lightweight product ships in a big box, they

can't charge enough too pay for the cost of delivery. At least that's what they claim.

 

To give you an idea of what the effect may be, I needed to ship a model from Texas to California. Fairly small model, but due to it's configuration and the way I had to support it in the

box, the box wound up being something like 22" x 15" x 10". Weight? About 7 pounds. I originally wanted to ship it FedEx Second Day Air to minimize time in transit. Instead of weight,

they priced it by dimensions/volume the package would require on the plane (it used to be weight only). Price? $128, which assumed that the package weighed 51 pounds.

 

Instead, I shipped by UPS Ground...holding my breath until the package arrived and I learned that it made it intact. Price? About $18.

 

When January arrives, that same size package will cost $128, regardless of whether it goes by air or ground. What effect is this going to have on mail order companies? The large ones

will get huge volume discounts. But what about the small...especially one man....garage manufacturers of aftermarket details and short run subjects that major companies will never touch?

Then there's custom kit buildups. Will anyone be willing to commission a model when the shipping cost is more...sometimes substantially more...than the model itself, which is already into three

figures, if not four.

 

Will we...or can we...pay those exorbitant shipping rates or will the guys...and gals... involved go out of business?

 

Incidentally, care to guess what caused this FedEx decision? Cases of toilet paper and adult diapers.

 

Your opinion?

Share this post


Link to post
Share on other sites

Welcome to the world of Keynesian economics. This happens to the cost of everything eventually. Our government is simply spending too much money, the Fed monetizes the debt it causes us, and the value of the dollar per percentage of Gross National Product gradually goes down and the cost of everything eventually goes up. And our Federal Reserve has to make those bond yields count after they secure loans from the World Bank, (i.e. China, Japan, Europe, etc.) Go to your grocery store, fluctuating gas prices, and assorted merchandise and see for openers.

 

 

Mark

Edited by aAzZ09

Share this post


Link to post
Share on other sites

You're preaching to the choir, Mark. I'm very aware of everything you said. It makes me wonder how long I'll be able to stay in business and how much I'll have to change to do so. I'm beginning to think I'll have to shift the majority of my output to e-books and whatever articles a paying magazine will take. Custom models and kit buildups could wind up being few and far between. I hope it doesn't happen, but the economic squeeze is beginning to make me feel like the meat in the sandwich!

Share this post


Link to post
Share on other sites

While I too lament the rising costs of everything, "models" have always gotten the short end of the stick for shipping due to their light weight ratio to box size; both built and unbuilt. I have an exercise company on my route that can send 25lb (and up!) weights in a "flat rate" box for the same cost as a kit or two that weighs 1 pound or less- across country!

 

Where shippers lose their shirt (as they claim) is in air transport, which is strictly by weight (the airplane only allows so much freight weight, no matter the sizes). Thus, they end up with a lot of weight for fewer shipping purchases, and yet still having to meet those "guarantees".

 

However, I do not see this as a big problem for anyone building on commission. Like ANY consumer provider, the builder now has to pass those higher shipping costs on to the customer. I can see some customers balking at having something built when it will cost them $130 more to get it. But, IF they're truly interested, and are already spending $300-$1000 for their "art" (which IS what we produce for them), the extra shipping charge is just part of the bargain. The builder should be ready to provide links or referrals to info that proves to the buyer he is not being gouged. Higher shipping costs may also induce some builders/buyers to do a little traveling for a meet and exchange that eliminates the shipping.

 

Last of all, don't forget your local post office! Their rates are often as competitive and sometimes times better, depending on sizes and weights. I can also state as FACT that EVERY day I see a UPS truck pull up to our office to drop off their stuff for US to deliver "the last mile". The same goes for some Fed-Ex packages. The USPS, in return, gets some air transport from both of them (as I understand it). I can also state that ALL of us handle our packages in transit the SAME way. None of us are better or worse (on average) with 'fragile" items. THAT is always simply a matter of whether the people who actually handle your package do their job correctly or not! Cheers!

 

GIL :smiley16:

Share this post


Link to post
Share on other sites

Gil, I agree with a lot of what you say about air freight and the aircraft that fly it but would add a bit more. Yes, weight is an important part of the equation of flight but only a single factor. Max gross takeoff weight is a limiting factor in what they can carry. The other two factors are cargo hold area and center of gravity. The first is very straight forward. You have a specific number of cubic feet and even if the gross cargo you want to haul is under the Max gross takeoff, if the cargo won't fit in the hold it doesn't mater. The other factor is center of gravity which is measured from a datum line in the aircraft and can be adjusted by how you load the aircraft. I won't go into the particulars because it can get quite complex and involves where you load fuel and how much and other load factors. Suffice it to say that if the CG is off the aircraft becomes unflyible.

 

My point is that if you charge by size then you could easily get into trouble with too much weight in very dense packages. The cargo hold is empty but you are at max gross takeoff. If you charge by weight you could wind up with huge boxes that weight little and the cargo hold if full but you are nowhere near max gross takeoff. Either extreme is an inefficient use of you aircraft. You might also have a CG problem if the boxes cannot be moved to adjust where that load sits. It is the classic finding a middle ground that is making most efficient use of your aircraft.

Edited by PeteJ

Share this post


Link to post
Share on other sites

I heard this news story on NPR last week. The problem isn't just aircraft, but trucks too: both are being filled up long before they run out of gross weight.

 

Think about the last thing you bought from Amazon: most likely it came in a cheesy cardboard box that was 3 times bigger than it had to be, filled with styrofoam peanuts or air-bags or bubble wrap. Amazon does everything by the numbers; you can be sure they've studied the shipping rates, cost of boxes and bubble wrap, and chances of shipping damage, and have figured out this is the cheapest way for them to ship things. They are basically taking advantage of loop-holes in the shipping rates to minimize their total costs; it was only a matter of time until FedEx and other carriers set rates that better reflect the true cost of shipping a package.

 

Part of the problem is that Amazon and other online shops want to sell you more and more of the stuff you'd normally schlep home from WalMart. Diapers, razor blades, cereal - anything you buy regularly - is perfect for selling you a "subscription" that saves you money and squeezes the brick and mortar stores even more. Trouble is, the shippers don't have the capacity for that, and as long as there is a shortage the shippers get to set the price.

 

By the time the rates change Amazon will figure out the new cheapest way, which will probably mean smaller sturdier boxes and less packing. Other shippers will raise their rates, but probably not as much as FedEx in hopes of stealing away some of their business. Eventually the shippers will have more planes and trucks, and competition will eventually push prices back down to something more stable. Model companies will do the same to the extent they can.

 

Basically just the "Circle of Life" as applied to business....

 

Don

Share this post


Link to post
Share on other sites

I agree with all your responses, including the statement that if a customer wants something badly enough, he'll pay the increased shipping costs. Unfortunately, there's a point where squeezing ends. Some customers simply can't afford the added cost. In other cases, as in custom walnut bases, they can't pass the shipping cost on to their customers. In my case, I sell very few walnut bases any more for exactly that reason. I've also lost custom model business for precisely the same reason. Bottom line is this: Regardless of how much of the shipping increases are legitimate versus outright gouging, there's a breaking point for every potential customer.

 

As for the customer traveling to pick up the completed model, I currently have one customer that will be doing that since he's only 30 miles away. But when a customer is 500 - 1000 miles or more away, that isn't a viable option. Of course, that does bring up an interesting thought. What about creating a network of modelbuilders where each member of the network would be able to hand off a packed, custom model from one modeler to the next until the model reached the customer? Each member would be able to specify how far he could take the model before handing it off. Sort of a modelbuilding Pony Express.

Share this post


Link to post
Share on other sites

I suggest looking at the rates charged by the limo companies. Send the precious model(s) by limo. You laugh!

 

Several years ago I recall a story about a strike by the drivers of special education buses in Boston (IIRC). The school district, in a bind to get the special needs kids to and from school, hired the limo companies for the daily tasks. It was CHEAPER than what the bus companies charged the school district, and the kids had the luxury of riding in stretch limos to school. Locally, I was the business official for my elementary school district, and I was always shocked by the daily charges for some students. One student in particular had an IEP (Individual Education Program) that required us to transport him as the only passenger in the vehicle over 100 miles each way every day through rush hours on the area interstates. The driver sat in the vehicle all day while the kid was in class. That was 20 years ago, and then we paid $200 per day.

 

Pampered models; that's what we'll get.

 

Ed

Share this post


Link to post
Share on other sites

I know what you're saying, Ed. There are models that are simply not shippable, forcing you to find other methods. I built a 1/16 scale JN-4D Jenny (a photo of it is at the bottom of the first page of my photography article in the current Journal) that was hand carried in a custom designed case to the new Fort Worth Museum of Science and History. It was gently loaded in the back of a minivan by myself and a friend and gently driven to the museum. From the parking lot, it was carried to the Museum by my friend and I holding handles on each side. At all times, the model was kept in a normal horizontal position. We handed it over to the Museum staff and started worrying that they wouldn't be able to unpack and display it without damaging it.

 

Well, they successfully managed that part of it. A year later, it was removed from display and placed back in the same case in order to return it to the aviation museum group I originally built the model for. Unfortunately, the staff wasn't that careful this time. When the aviation group opened the case, the tail had been knocked off. Someone in the group "repaired" it and, allegedly, it doesn't look too bad. I haven't seen it since it left the Museum and I really don't want to. I'm just glad that where it is now displayed, my name isn't on it!

 

Richard

Share this post


Link to post
Share on other sites

×
×
  • Create New...