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New Dimensional Weight Factor to Boost Shipping Costs

Here’s a link to an important article in Multichannel Merchant  — New Dimensional Weight Factor to Boost Shipping Costs.

This is a huge change.  The article documents a coming change by FedEx and UPS to reduce the factor used to calculate Dimensional Weights from 194 to 166.  The article explains the calculation, if you’re unfamiliar with it.

This change is important and noteworthy in both the short-term and the long term.  In the short-term, because it will mean an immediate rate increase on many packages.  And it will also increase the percentage of packages to which DIM weights will apply.

In the longer term, it portends a move towards DIM weights becoming the default or de facto method for rating the cost of shipping parcels.  After all, it’s generally accepted that planes and trailers are most likely to fill up space-wise before they fill up weight-wise.  So carriers will make the most money, if they charge based upon DIM Weights.

An example for comparison.  Let’s assume a 3# packaged being shipped to Zone 5 — the generic average parcel bound for a residential address.  Further, let’s assume a parcel 12″ x 12″ x 8″ — not huge, not small.  This parcel calculates to a DIM weight of 5.938 using the 194 factor; 6.94 using the 166 factor.

Here are UPS Ground rates (without accessorial charges, based upon the current rate table):

  • 3# Z5          = $6.24
  • 5.938# Z5 = $7.10 (an increase of 14% over actual weight)
  • 6.94# Z5    = $7.29 (an increase of 17% over actual weight)

This change by FedEx & UPS should result in a lot of work on product packaging, in an effort to reduce parcel sizes.  And it will put increased pressure on “free shipping offers.”

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