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.
USE THIS DIMENSIONAL WEIGHT COMPARISON TOOL:
https://www.lojistic.com/fedex-ground-dim-calculator
Author
Rich Harkey
Rich Harkey
Senior Strategy Manager
Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry.
As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts.
Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results.