In recent years, freight companies have seen declining revenues as shipments have become steadily lighter. Studies have found a significant difference between volume weight and actual weight.
Products have become lighter. Products made many years ago generally had a solid steel frame and some kind of mechanical parts. If they contained electronics, these had a high power consumption and required a heavy power supply. Today’s products contain few mechanical parts, are often made of plastic, and are controlled by a small chip.
Just compare your new mobile phone with a “brick” from five years ago. Consumers are the winners, and the losers are the freight companies that invoice based on weight alone.
The rules for calculating freight charges have been around for decades: Clients pay for the volume weight or the actual weight of the goods, whichever is greater. The sender declares the dimensions of the shipment (Length, Width, Height) and weight. For domestic shipments, the freight charge is based on:
Volume weight: Length x Width x Height x 250 kg / m3
Not all goods are charged based on the parcel rules. For example, palletised goods are charged at a fixed price for each European pallet. But clients have also been very creative in this area, for example, by overlapping the pallet edge by 5 cm all the way around. This leads to major problems when packing vehicles, leading to reduced capacity – who pays for this? – the freight companies!
Parcels are often also charged based on weight ranges, such as 0 – 5 kg, 5 – 10 kg, etc. But again, the volume weight might lead to a one or two class increase. Given the greater international volume of goods traffic, there are more and more links in the chain of delivery, and one of these might perform volume calculations and invoice for the full volume weight.
We then have to hope that the first link in the chain has also charged the sender for the full volume weight and not just the weight.
Big and small
The problem is the same for small and large freight companies alike:
Gunner Rasmussen, Danske Fragtmænd: “Over the last three to four years in particular, we have seen a trend for goods to have a lower density. In these cases, clients might not have been aware that the transport conditions have changed as a result – so we are forced to react”
Link Logistics, specialises in shipping parcels for private individuals and small companies who would otherwise pay a high price for an individual parcel at one of the large carriers.
Link Logistics has lower prices because they collect goods into larger shipments which they can ship with the large carriers at better prices.
“Dimension scanning allows us to provide a precise service to our customers, as there will also be cases where they face a lower charge once the goods are measured”, says John Olsen.