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If you ship with UPS or FedEx, a big upcoming change will increase your shipping costs significantly.
By Charlie Curry, Dec 1, 2014

Both UPS and FedEx are changing from weight based pricing to size based pricing for all shipment types. This means all packages will be measured by “actual weight” and “dimensional (DIM) weight” with the heavier of the two being the “billable weight”. The change in pricing method is expected to lead to a 30-50% increase in seller shipping costs overall. E-commerce shippers who typically ship lightweight but large volume packages are going to be particularly hit hard unless they make some changes to the size of the packages they ship. The published impact is that 63% of packages will now be paid by DIM weight rather than actual weight.

What is dimensional weight?

Dimensional weight, or volumetric weight, is a way for shipping carriers to make up cost for packages that are shipped in boxes that are light for their size. Since these packages are “wasting” space, they will be more expensive for shippers. Dimensional weight is measured by taking the volume of a packaged box (length x width x height), and dividing it by the Dimensional Weight Factor. What determines the Dimensional Weight Factor? They’re actually a preset number depending on whether your package is international or not.

Dimensional Factors

  • Domestic Air / Ground = Factor 166
  • International = Factor 139
  • One way the U.S. Postal Service is taking advantage of the FedEx and UPS changes is through Cubic Pricing. Cubic Pricing doesn’t factor weight, as long as your package weighs less than 20 lbs. and is .50 or fewer “cubic feet” in size. Essentially this means, if you ship smaller, very heavy packages, you can take advantage of Cubic Shipping. You can find the cubic feet of your box by using this formula:

    Cubic Feet = Length x Width x Height / 1728

    To also take advantage of the incoming Dimensional Weight changes, in September 2014 the U.S. Postal Service slashed prices on commercial Priority Mail rates to attract big e-commerce shippers in time for holiday free shipping.

    Recognizing that prices were too high to be competitive on heavier weights, and to make an opportunity of the new Dimensional Weight policies, Priority Mail prices were reduced 30-50% in the weight categories most used by e-commerce shippers (6-20 lbs). E-commerce companies who can gain access to USPS Commercial Plus Pricing, like with ShippingEasy, stand to add to their bottom line this holiday season.

    What this means for your E-commerce business

    Shipping can kill margins. If you ship FedEx or UPS, you will feel the effects of these changes. It’s hard to negotiate rates and your dimensional factor with UPS/FedEx, they typically only grant those kinds of privileges to companies with massive shipping volume. It might be time to consider USPS as a shipping carrier for most of your packages as they offer a variety of shipping options that can lead to significant shipping cost reductions. They have options including:

    • Flat Rate boxes that don’t measure package weight
    • Cubic Shipping for very heavy, smaller packages
    • Regional rate shipping for cheaper rates for packages that don’t travel far

    Beyond that, you can get access to discounted rates through companies that have already negotiated rates on your behalf (hint: companies like ShippingEasy).

    Don’t ignore the changes; they likely will impact you, no matter your business size.

    Get a tape measure and keep it handy! To make sure you aren’t going to overpay for future shipping:

    • Audit your boxes. Find the dimensional weight vs the actual weight.
    • Don’t pay to ship air.
    • Reduce the box size, eliminate void fill and convert to polymailers when appropriate.
    • Renegotiate the DIM factor with your carrier

    Use multicarrier shipping software that offers discounts, offers negotiated rates and lets you set shipping rules to take advantage of each carriers sweet spots.

    Learn how to calculate the dimensional shipping cost of a box. It’s an easy calculation.

    Step 1 – Weigh

  • Weigh the package to determine actual weight
  • For example, say the package weighs 4 lbs
  • Step 2 – Measure

  • Measure the length, width, and height of the package
  • Multiply the dimensions to determine volume/cube in cubic inches (round– 0.4” down; round 0.5” up)
  • For example – a box that’s 12” long by 12” wide by 6” high would be 12X12X6 = 864
  • Divide by the dimensional weight factor to determine dimensional weight
  • 864 / 166 factor = 5.2
  • 5.2 rounds up to 6 lbs, which is greater than the 4 lb actual weight
  • Step 3 – Compare

  • Pay the greater of the actual weight or dimensional weight. This package pays the 6 lb. price.
  • Now that you understand the calculation, take the guess work out of it with ShippingEasy’s handy dimensional weight calculator.

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    Charlie Curry

    Jack Ship's good friend Charlie is a former Business Alliance Manager for the USPS. He enjoys advising ecommerce merchants on clever ways to save on shipping.