Executive Briefings

How You Can Manage or Avoid Dimensional Weight Price Increase

This past June, the largest overnight delivery carriers, FedEx and UPS, announced that they would apply dimensional weight pricing to all shipments, effective January 2015. It is expected that shipping costs will increase 20 percent to 30 percent and affect over 70 percent of all shipments. What shippers are truly affected by the new pricing model? What can be done to avoid the cost increase?

Dimensional weight pricing is an industry practice that sets the shipping price based on package volume which equates to the amount of space a package occupies in relation to its actual weight. This pricing method takes into account the exterior package size, which is the amount of space a package occupies when in the cargo area of the transport vehicle, in relation to its actual weight to determine the appropriate price. The dimensional weight calculation will apply if it is greater than the actual weight.

The largest delivery companies have claimed that this method is required due to industry trends, packaging efficiencies and sustainability opportunities. The number one reason for the change is consumer behavior. End consumers are now making more purchases via alternative buying channels.

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Dimensional weight pricing is an industry practice that sets the shipping price based on package volume which equates to the amount of space a package occupies in relation to its actual weight. This pricing method takes into account the exterior package size, which is the amount of space a package occupies when in the cargo area of the transport vehicle, in relation to its actual weight to determine the appropriate price. The dimensional weight calculation will apply if it is greater than the actual weight.

The largest delivery companies have claimed that this method is required due to industry trends, packaging efficiencies and sustainability opportunities. The number one reason for the change is consumer behavior. End consumers are now making more purchases via alternative buying channels.

Read Full Article