Fed Ex and Ups announced it will institute Dimensional weight pricing on all ground packages by the end of 2014. Currently Fed Ex and Ups only apply Dimensional pricing to packages measuring 3 cubic feet or greater. Subjecting all packages to dimensional weight will affect virtually all US shippers. Dimensional weight is a calculation of a theoretical weight of a package. This theoretical weight is the weight of the package at a minimum density chosen by the freight carrier. Calculations are as follows.
U.S. Domestic Shipments
Dim Weight = (Length x Width x Height) / 194
Example
Dim Weight = (12" x 20" x 16")/194 = 19.8
International Shipments
Dim Weight = (Length x Width x Height)/166
Example
Dim Weight = (12" x 20" x 16")/166 = 23.1
The dimensional pricing rule change will coincide with the typical annual price increase, thus having an extraordinary impact on the cost of shipping in 2015 and beyond. 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, they can take up a lot of space on delivery trucks but are priced at lower rates. It is unclear whether the dimensional pricing model will bleed into the LTL marketplace. The NMFC categories address dimensional weight but only as an estimate. At this point, shipper remedies may be limited. FedEx and UPS could take remaining months before the change goes into effect to negotiate some relief for their customers. It is not advisable to wait until after the rate increase has taken effect before taking action. Now is the time to start planning. Enlisting the aid of a Freight Management professional could help manage and negotiate this new pricing for your company.
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