Postal Shippers Beware: USPS Implements New Dimensional Pricing in June
The United States Postal Service is changing the way it charges for boxes shipped via Priority Mail, Priority Mail Express and other parcel shipping services. Currently, the Postal Service applies a dimensional divisor (DIM) of 194 for boxes that exceed one cubic foot in volume, and only for zones five and above. Effective June 23, 2019, the DIM divisor will be reduced to 166 and will apply to all zones.
Let’s take a look at how that might impact shippers. Take, for example, a box that’s 15x12x10. With a 194 DIM, the billed weight would be 10 pounds (length x width x height). However, at a DIM of 166, the dimensional weight is 11 pounds. When looking at Priority Mail rates to zone five (retail rates shown below), the impact is significant:
- 10 Pounds (194 DIM) = $26.85
- 11 Pounds (166 DIM) = $29.00
- Price difference = $2.15 (8 percent).
While the June change in dimensional divisors from 194 to 166 will certainly impact some USPS shippers, it's important to know that the Postal Service will continue to apply actual weight (not DIM weight) for packages that don’t exceed one cubic foot in volume. In other words, as long as the cubic inch volume of a box doesn't exceed 1728, the charge will continue to be the actual weight.
So, what can shippers do? There are several strategies:
- Explore improving postal pricing by getting commercial base pricing (CBP) or commercial plus pricing (CPP). High-volume shippers can get even deeper discounts by pursuing a negotiated services agreement (NSA) or through authorized postal resellers. These additional discounts can offset DIM increases.
- Move packages impacted by the USPS changes to FedEx, UPS or other parcel carriers. High-volume shippers can negotiate deep discounts and improved DIM divisors. Many regional carriers offer shipper-friendly DIM divisors compared to FedEx/UPS/USPS, and/or are more apt to negotiate custom incentives with shippers.
- Improve packaging. By reducing box dimensions and minimizing fill, shippers can reduce the impact of dimensional billing, reduce corrugated and packing material costs, and reduce carbon emissions.
If you haven’t already, postal shippers are wise to measure the impact of the pending changes and then take proactive measures to avoid taking an 8 percent-plus increase on some of your parcels. Contact me if you’re in need of help. Good luck!
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies.
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Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.