Rising fuel prices and failure to meet quarterly profit goals have led UPS and FedEx to pass on costs to businesses and consumers. “Dimensional” shipping costs will replace weight-priced shipping starting in late December 2014 for UPS and in January 2015 for FedEx ground shipments. Large, light parcels (such as large boxes of clothing or paper goods) are the direct target of the pricing shift. Although light, this type of shipment is bulky and therefore takes up valuable room on delivery trucks.
FedEx and UPS Rate Increases
Under the current system, a box of 30 rolls of toilet paper weighing 5 pounds only gets charged for its weight. But the large box it comes in takes up a lot of space in trucks and cargo planes that could go to smaller and heavier boxes. Smaller and heavier equals more profitable. By 2015, the shipment will be billed as if it weighed 21 pounds.
Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume—the amount of space a package occupies in relation to its actual weight, said FedEx in a statement.
The impact of such a change to businesses could result in up to a 30% increase in shipping costs depending on the zone. This change is expected to affect up to one third of FedEx’s ground business. For consumers, these FedEx and UPS rate increases could herald the end of free shipping from ecommerce websites such as Amazon.com as they attempt to absorb the rate increase. At the very least, dimensional priced shipping costs would force vendors to reconsider their packaging practices. Minimizing package size as well as auditing shipment carriers will be a priority in 2015 as businesses scramble to meet the rate increases with minimal impact to their customers.