Understanding the Changes to FedEx Ground Dimensional Weight Pricing
05/12/2014 — Leah Palnik
FedEx recently announced that dimensional weight pricing will apply to all FedEx Ground shipments, effective January 1, 2015. This is a significant change from the rating structure in place today. Currently only FedEx Ground packages measuring at least three cubic feet (5184 cubic inches) are subject to dimensional weight pricing.
UPS is likely to make the same changes, as FedEx and UPS have a history of matching one another's pricing strategies. Both of their general rate increases (GRI) have matched over the years, including similar accessorial fees and special handling charges.
Even though this change is still several months away, it's important to determine what this will mean for you and your business for future planning. So what can you do?
Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume, in relation to its actual weight. Carriers use dimensional weight in order to account for the space packages take up on their trucks and planes. This allows for a more precise way to charge for their services.
According to the 2014 FedEx Service Guide, FedEx Express calculates dimensional weight for shipments within the U.S. by multiplying the package length by width by height (in inches) and dividing the total by a DIM Factor of 166 (the DIM Factor represents the volume of a package allowed per unit of weight). Dimensions that measure one-half inch or greater are rounded up to the next whole number, dimensions less than one-half inch are rounded down, and the final number is rounded up to the next whole pound. If the dimensional weight exceeds the actual weight, the former becomes the billable weight. It is likely that the new FedEx Ground dimensional weight pricing will follow the same guidelines.
Determine the impact
Start by looking at the FedEx Ground packages you typically ship and their box sizes. For example, if you tend to ship 24x12x12 boxes, the dimensional weight is 21 lbs. Here is how that is calculated:
length x width x height = volume
24 in x 12 in x 12 in = 3,456 cubic inches
volume/dimensional divider = dimensional weight
3,456/166 = 21 lbs.
You then compare the dimensional weight to the actual weight, and the higher of the two becomes the billable weight. In this example, if your actual package weight is 15 lbs., you will instead be billed at the dimensional weight (21 lbs.).
The change in dimensional weight pricing for small package ground shipments is only part of the impact you'll see on your budget for 2015, but it will be an important one. Keep an eye out around the New Year for the PartnerShip Small Package Rate Increase white paper that will come out after all of the general rate increases are announced by the carriers.
Find ways to offset the rate increase
Be mindful when you select the packaging for your small package ground shipments. Make sure you're not using unnecessarily large boxes for lighter shipments. If you don't currently have one, investing in a scale can be helpful when determining how to ship out your small packages and selecting box size, so you know exactly what you're working with and how much you can expect to pay.
Securing discounts for your small package shipments is one of the best ways to offset this rate increase. PartnerShip offers association members discounts on select FedEx services. If you're not sure if you qualify for one of our small package shipping programs Contact Us and we'll find the solution that's right for you. Also, if you click the button below, we can provide you with a free, no-obligation shipping analysis to determine how much we can help you save on your small package shipping.