May 09, 2014

FedEx just announced what will likely be the single largest rate increase on record for many shippers.  Effective Thursday, January 1, 2015, FedEx will impose dimensional weight (DIM) pricing on all Ground packages.  Currently, FedEx only applies DIM pricing to Ground packages measuring three cubic feet (5184 cubic inches) or greater.  Come January 2015, FedEx is eliminating this rule, enabling their ability to apply dimensional weight pricing to EVERYTHING (including Ground packages measuring less than three cubic feet).  Subjecting all packages to dimensional weight pricing will affect virtually all US FedEx shippers, as the vast majority of Ground shipments are less than three cubic feet.

New DIM Examples (none of which are currently subject to DIM weight):

  • 6” cube box (6"x6"x6") will have a billable weight of at least 2 lbs
  • 12” cube box (12”x12”x12”) will have a billable weight of at least 11 lbs
  • 16” cube box (16”x16”x16”) will have a billable weight of at least 25 lbs

For those who have negotiated a custom DIM factor greater than 166…you are not immune to this change.  Make no mistake; unless your contract specifies an exception to the 3 cubic foot DIM threshold, this will affect you.  The dimensional pricing rule change will coincide with the typical annual price increase, thus having an extraordinary impact on the cost of shipping in 2015 and beyond.

UPS customers should also be concerned.  Looking back, UPS and FedEx have a very long history of matching each other’s pricing strategies.  For example, in 2011 when FedEx announced the DIM factor change from 194 to 166, UPS followed in like manner shortly thereafter.  Given the duopolistic nature of UPS and FedEx, it is very likely that UPS will follow suit with this new dimensional weight price change.

It is not advisable to wait until after the rate increase has taken effect before taking action.  Now is the time to start planning.

Curious to know how this major rate increase will affect your costs?  Source Consulting can quantify the impact to your business and help you determine a strategic approach to mitigate this change to Ground shipping prices.



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