How Your LTL Pallet Freight Depot is Losing Significant Revenue
If you are the manager of an LTL freight depot you already know how understand this vexing issue – and it you know how important it is. While your staff might be skilled with a tape measure or measuring stick, these methods are often not legal for trade and are especially inaccurate for irregular or odd-shaped items. If you rely on forklift scales for weight measurements, there’s a high chance those readings are incorrect and not legal for trade either.
In both scenarios, if you do not already use a legal for trade pallet dimensioner, you’re likely losing revenue. Furthermore, you wouldn’t be able to justify any price increases to customers if legally challenged. This is where the term “legal for trade” comes into play, overseen by the Australian National Measurement Institute (NMI), which certifies the equipment and licenses tradespersons to verify it in the field.
The Financial Model: How Each Depot Can Lose a Million Dollars Annually
Typically, charges invoiced to the shipper are based on a formula where 1m³ equals a certain number of kilos (e.g., 250 or 333) at a price per kilo rate (e.g., $0.90), heavily influenced by the final delivery destination or zone. Today, more freight is being charged by cubic volume rather than by weight.
Scenario 1
Imagine you charge for non-contract LTL palletised freight at 1m³ = 250kgs. For instance, freight going from Melbourne (MEL) GPO to Brisbane (BNE) GPO via road express, with these dimensions:
- Declared Dimensions: 100 x 100 x 100 cm (LWH) = 1.00m³
- Dimensional Weight: 1.00m³ x 250 kgs = 250 kgs
- Price: $250 (at $1 per kg)
But what if the actual measurements are:
- Actual Dimensions: 105 x 110 x 120 cm (LWH) = 1.386m³
- Dimensional Weight: 1.386m³ x 250 kgs = 346 kgs
- Price: $346
This represents a difference of $96 dollars! For just one pallet!
Scenario 2
Consider a palletised item where the sender did not measure accurately, ignoring overhang or precise height measurement. Declared dimensions are 120 x 120 x 120 cm (LWH), for example a very normal pallet size, with both the dim weight and dead weight being 432 kgs:
- Declared Dimensions: 120 x 120 x 120 cm (LWH) = 1.728m³
- Dimensional Weight: 1.728m³ x 250 kgs = 432 kgs
- Price: $432
However, the actual dimensions per the Pallet Freight Dimensioning System are 130 x 135 x 140 cm (LWH), with a dead weight still at 432 kgs:
- Actual Dimensions: 130 x 135 x 140 cm (LWH) = 2.457³
- Dimensional Weight: 2.194m³ x 250 kgs = 548 kgs
- Price: $614
This difference of $182 for a single seemingly normal pallet shows how easily items can be under-measured, leading to significant revenue losses.
The Broader Impact
On average, if you gain an extra $15 per measured pallet across 300 items per day, this equates to $20,000 in additional revenue per week. Over 50 weeks, this totals over $1.1 million dollars.
Some inter-state express freight carriers gain an average of $10 to $15 per measured pallet or bulk item, handling around 500 unique pieces per day:
- Daily Revenue Gain: 500 x $15 = $7,500
- Annual Revenue Gain: $7,500/day x 250 days = $1,875,000
Smaller inter-state depots handling around 200 larger or palletised items per day also average $15-$20 per pallet:
- Daily Revenue Gain: 150 items x $15 = $2,250
- Annual Revenue Gain: $2,250/day x 250 days = $562,500
Summary
In summary, the amount of revenue leakage can be staggering. By adopting certified, legal-for-trade pallet dimensioning systems, you can ensure precise measurements, capture time-stamped images, defend your pricing legally, and recover significant lost revenue. But you are also improving customer service and, in many cases, improving your own digital strategy by automating and digitising previously manual processes.
