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FedEx & UPS New Dimensional Pricing

Beginning immediately after the holiday season (Dec 29th for UPS and Jan 1st for FedEx), shipping majors UPS and FedEx will be introducing a new form of package pricing. Typically priced by weight, UPS and FedEx now plan to price packages based on the volume of the box itself. Previously, no DIM weight was calculated for packages which were less than 3 cubic feet. For a customer who currently ships a 2 pound product in a 14″x10″x6″ box, they are charged for two pounds in shipping. The new DIM calculation now applies to ALL packages. The DIM weight of the package is calculated by LXWXH/166. This package would now ship at ((14x10x6)/166)) – six (6 ) pounds!

According to Forbes: “Depending on the zone, the change could mean an increase in shipping costs of up to 30%.” One upside of this price change is that packing will have to become more efficient – not wasting a big box on a tiny product (thus, saving cardboard). UPS sees this new pricing method of a new way to promote greener packaging practices because more shippers will seek to optimize their packaging practices leading to a reduction in excess package materials as well as fuel emission and transportation costs. However, while this effort to go greener is definitely a smart business plan, the real winner of this price change could be USPS who will continue to charge flat rate services for domestic shipping up to 70lbs. In addition, shippers might look to use regional parcel carriers over these big national names (i.e. Lone Star Overnight in the Southwest and Pitt Ohio Express in Midwest). We’ll see after the holidays how shippers and retailers will respond: will they go green or save their green? (Forbes). ABC can help you identify ways to repackage your product to reduce DIM weights and our large shipping volume can afford you additional savings. You can also check out our blogs for more interesting articles here.