Dim Weight Pricing and How it Could Affect Your Shipping Charges
The way in which ground shipping charges are derived is about to change in 2015. Are you prepared? Both FedEx and UPS announced plans to apply dimensional weight pricing on all packages. The two companies already use this pricing on many of their other services, but have now opted to expand this practice further. Both companies believe these changes will help to reduce excess packaging materials and overall package sizes in order to better optimize loads, which may ultimately lead to related reductions in fuel use, vehicle emissions and transportation costs.
What is Dimensional Weight Pricing?
Dimensional weight pricing takes into account the exterior package size. This is the amount of space a package occupies when in the cargo area of a transport vehicle in relation to its actual weight. Currently FedEx Ground applies dimensional weight pricing to packages measuring three cubic feet or greater, whereas FedEx Express applies it to all packages. Meanwhile, UPS already uses dimensional pricing for packages carried in its air network and larger pieces shipped via ground. However, with the recently announced changes to pricing, shipping questions are rising.
Take for example an average three-pound package. Its length (L) and width (W) each measure 10 inches, while its height (H) is nine inches. Under dimensional weight pricing, the new billed weight becomes six pounds. Under the current pricing plan, a shipper would be charged by the three-pound weight; under the dimensional weight pricing plan to take effect in 2015, the weight for price calculation increases 100 percent.
The Impact on Retailers
What does this change in shipping charges mean for retailers? It likely means an increase in overall shipping costs and perhaps even the end of "free shipping" for customers. According to some studies, the majority of B-to-B and B-to-C shipments weigh less than 20 pounds. In fact, it's believed 32 percent of all ground packages will be affected by the price increase, with the majority of those weighing less than five pounds.