UPS & FedEx Price Increases
Did you know that UPS and FedEx are revising their pricing for ground delivery for 2015? Let’s take a closer look at what’s happening to make sure you are prepared for the change.
First, lets understand the concept of dimensional weight pricing.
Carriers determine shipping-rate based not only on distance and weight, but also the box size. Let’s consider two scenarios:
- You have a huge box that weighs just 1 lb, but takes up a lot of room in a delivery truck
- You have a small box that weighs 5 lbs, but takes up very little room in a delivery truck
In the second scenario, with the smaller the box, delivery companies can fit more packages in a truck or a plane and thus the smaller box is more cost effective for the shipper. To incentivize using smaller boxes to ship, despite the heavier weight, FedEx and UPS charge a premium for bigger boxes – and that’s dimensional weight pricing.
Up until 2015, UPS and FedEx waived dimensional weight pricing for packages measuring 3 cubic feet or less. In 2015, dimensional weight pricing will apply to all Ground shipments.
What does this mean in plain English?
Say you ship a box that measures 12” x 12” x 12” (ie. one cubic foot) and weighs 4 lbs. Until 2014, you would pay the rate for shipping a 4 lbs package. From 2015 onward, you will pay the rate for the dimensional weight of 11 lbs*. The same package just got ‘heavier’ by 7lbs!
Why the change?
Ecommerce shipping trends have resulted in a decrease in package density thus increasing the costs per package – think big boxes with lots of packaging material that don’t weigh much but take up lots of cargo space. Shipping carriers have reacted to this by removing the 3 cubic foot exception to align rates with costs and to incentivize shippers to optimize their packaging practices.
What can you do to prepare for the change?
- Check to see if your box sizes are impacted
- Use a shipping app that lets you look up rates before creating a label
- Contact your UPS and FedEx representative to understand how it will affect your business
* Dimensional weight of a 12” x 12” x 12” box weighing 4 lbs = (12 x 12 x 12)/166 lbs, where 166 is the dimensional divisor