FedEx and UPS Are Moving to Dimensional Pricing in 2015
Until now, weight has been the only criteria used for determining shipping cost in the eCommerce shipping industry. As a result, retailers never bothered about the size of boxes used for packaging products, as size never mattered and wasn’t affecting the overall shipping price, until now.
However, this fundamental process of eCommerce fulfillment is expected to undergo a change in January 2015, when UPS and FedEx will start using different criterion in the form of box dimensional weight for every ground package. Delivery expense will now be influenced by weight as well as size of the package.
So What Exactly is Dimensional Pricing?
Dimensional pricing takes the Length X Width X Height of the package to calculate shipping cost. The figure is then divided by the dimensional factor(166) applicable in the shipper’s country. UPS has a good explanation of how to Determine Dimensional Weight here.
The existing dimensional weight is applicable to shipments exceeding 3 cubic feet in size. Come January 2015, and every ground package will be charged on the basis of billable weight. Actual Weight is the actual weight of the package in pounds, which is calculated in a rounded up figure. If a shipment weighs 5.3lbs, the actual weight will be counted as 6 lbs.
Get Ready, Make Adjustments Now!
A majority of online retailers are not yet aware of the proposed changes in the shipping prices that will take effect from the first billing cycle of 2015. eCommerce stores selling bulky, lighter items in different sizes and weights are most likely to be affected, while those dealing in smaller, dense items might not experience a major impact.
FedEx and UPS will use volumetric scanners for all shipments to comply with the new changes. These scanners calculate the cube size. It’s time for shippers to plan for the ensuing changes and make adjustments to include dimensional pricing.
We recommend the following steps to deal with this change to Dimensional Pricing.
1. Intelligent packaging
Why use a bigger sized box for a product that can easily fit into a smaller one and pay extra charges? Intelligent packaging is all about determining the right size of the box that best fits the items inside. Prepare to add different sized boxes at your packing station that can accommodate products of different sizes. You can leverage technology, such as carton optimization software, to determine and customize the best size for a product. OR you can Outsource Order Fulfillment to a professional order fulfillment company and let them handle it.
2. Make adjustments at checkout
Until now, shipping cost at checkout was based on the weight of a product. However, now retailers will need to make adjustments to assess the cube of a packed order to determine its dimensional pricing. Accurate measurement of billable weight and shipping cost is not going to be easy. Thus online retailers and fulfillment providers can collaborate to create rules based on the characteristics of the product and ordering patterns and establish metrics based on experience. This will help to determine dimensional pricing when order patterns are repetitive while there isn’t a lot of variety or size difference.
3. Capture dimensions
It will help to capture both dimensional and actual weight during shipping to get an accurate measurement of the billable weight. In order to do so, you can create standardized boxes with printed dimensions and scan-able barcodes with pre-calculated dimensional weight. It will also help to include dimensions of each box type in your shipping software. Or you may want to prefer in-line dimensional scanners that electronically capture package dimensions. This is a particularly effective approach when higher volumes or infinite number of items make it hard to choose standardized box sizes.
4. Modify carrier contracts
UPS and FedFx use a divisor of 166 to get the dimensional weight figure. Large fulfillment companies and volume shippers can negotiate on a higher dimensional factor (which is better for volume shippers) in order to decrease the number of packages where shipping weight is less than dimensional weight. So, fulfillment companies may not be affected as much as small to medium online retailers.
5. Make smarter choices on shipping methods
Remember, there are alternative shipping options that will not be affected by this dimensional pricing change. Choose your shipping method carefully and maybe sourcing for alternative products with flat fee shipping or actual weight-based pricing may also be a good way to go. What’s more, some hybrid methods will not be affected by the 2015 dimensional pricing change.
Carefully preparing for, keeping track of and then examining your changes that you put in place will help you make sure that your cost do not get out of hand. It may be the right time now to look for an Order Fulfillment company and let them handle shipping your products for you.