The latest news in the shipping industry is the changes to dimensional weights. United Parcel Service announced it will expand dimensional weight pricing for all U.S. ground shipments, effective Dec. 29, 2014.
UPS already uses dimensional weight for domestic and international air services, as well as UPS Standard service to Mexico and larger packages sent to Canada. The company said it will also start using the billing method for all packages shipped to Canada through UPS Standard.
Dimensional weight pricing is a common industry practice that sets the shipping price based on package volume — the amount of space a package occupies in relation to its actual weight. Simply put if you want to save money do not ship any extra air. Experts claim that 33% of all Ground shipments will be impacted by this change.
Similarly, FedEx announced it will apply dimensional-weight pricing to all shipments starting Jan. 1, 2015. Like UPS, FedEx has used size-based pricing for express shipments and certain large packages.
Generally the switch to dimensional weight pricing is in response to rising fuel costs and the increasing popularity of online shopping. As products shipped from online marketplaces like Amazon.com and eBay are often smaller items packed in larger boxes, that can take up a lot of space on delivery trucks but are priced at lower rates. The company said it will also start using the billing method for all packages shipped to Canada through UPS Standard.
In addition to evaluating your choice and mix of carriers, what other steps can you take to reduce ground shipping costs, in light of these upcoming changes by FedEx and UPS?
- Consider using heavy duty shipping bags that can withstand the wear and tear of the process, but conform to the size of the merchandise. Based on the current DIM rules, merchandise shipped in bags appears to be unaffected by the new rates.
- Ask your customers to make any returns in the original box. If your company is paying for return shipping, this will keep your costs down because the carton was selected to optimally fit the merchandise.
- Implement software or other technology that measures and weighs each SKU and selects the smallest carton that allows the merchandise and packing materials to ship safely. Avoid putting small items such as apparel or pharmaceuticals in overly large boxes with excess space.
Regional Carriers like UDS do not apply these DIM weights in the same way and therefore are able to save their customers more money. Call us today at 630-930-5201 or visit us at http://www.uniteddeliveryservice.com// to learn more.
* Dimensional Weight is calculated by multiplying the length by width by height of each package (in inches) dividing by 166 (for domestic shipments) or 139 (for shipments to Canada)… unless a customized dimensional weight factor has been negotiated, in which case that factor should be used.
Example: a 2 lb. package with dimensions of 10”L x 10”W x 10”H will be billed at 7 lbs. as of January 1, 2015 (10 x 10 x 10 = 1000 ÷ 166 = 6.024 rounded up to 7 lbs. In today’s environment, it is billed as a 2 lb. package.