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Big Impact of Dim Weight Changes on Shipping Costs

If you ship packages, especially less dense packages, you’re probably aware of the dimensional weight changes that went into effect in January 2011 for both FedEx and UPS rates. To encourage denser packaging, FedEx and UPS dropped the dim weight divisor from 194 to 166. Sounds innocuous enough, but what does it mean?

Carriers charge by the pound and penalize big, light packages because if they’re hauling air, they want to be paid for it. So every package is given a “dimensional weight’, which is it’s length x width x height divided by a dim weight divisor. A shipment is billed according to the higher of dimensional or actual weight.

This encourages shippers to economize on packaging and use the smallest box possible – a healthy incentive for a greener world. However, when that divisor drops by 15%, some feel the pinch more than others. If you ship books or barbells, it might take a single digit divisor to affect you, so there’s not so much to worry about. Your rates only increased by the standard rate bump of 4.9% as advertised by UPS, or 7.5% as some independent analysts have measured.

If you ship dried flowers on the other hand, you just encountered the same standard rate increase, plus the dim weight charge – about 15%, depending on size and zone. By our accounting, the impact is a 18%+ price increase for unlucky, low-density shippers.

If it helps ease the blow, this is great news for UPS and FedEx shareholders. T. Michael Glenn – Executive VP, Market Development and Corporate Communications said this about the Dim Weight changes in a recent earnings call:

“So, one of our objectives here is to actually minimize the percentage of packages that receive the dimension weight charge. I don’t see a significant trend in the near term, but in the long-term, hopefully, customers will be more efficient in their packaging going forward so they don’t have to receive the higher dim charges. They’re being well received… , we don’t see any significant pushback regarding the dim changes.”

Read more cynically – the carriers are riding the float time between the rate increase, and the customers’ behavioral change. The net result is a nice profit boost thanks in part to the big box shippers.

“…we don’t see any significant pushback regarding the dim changes” suggests he may be buffered from those feeling the 18%+ impact on their FedEx bill.

If you fit the ‘less dense’ shipper category, follow Mr. Glenn’s advice and shrink your packaging as much as possible. You can also use the Direct-Recovery online dim weight assessment tools to see what the impact is, or could be, on your business.

 

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