Just over one year ago, UPS and FedEx changed the way they charged for shipments to be more in line with rules for air shipments. This meant all ground shipment costs would reflect their dimensional weight, which is found using a formula that takes into account actual weight and dimensions.
The two shipping vendors implemented this rule because in addition to heavier packages costing more to ship, their size is also a determining factor, Tech.Co explained. There is only so much room in the shipping container, and the bigger a box is, the fewer small packages can fit inside.
Logistics Management reported these changes paid off for the shippers. During FedEx’s third quarter last March, the company announced it saw gains in:
- Operating income – up 14 percent
- Volume growth – up 7 percent
- FedEx Ground revenue – up 12 percent
- Package yields – up 3.7 percent
- Revenue per package – up 3 percent
However, these results included December 2014, during which the DIM weight rule was not yet in effect.
“The DIM rule increased the average retail shipping cost 17 percent.”
These increases resulted in decreases for many retail shippers. Multichannel Merchant reported this change could increase the average retail shipping cost 17 percent, or even as high as 30 percent. This is no small figure, and small and large businesses alike have needed to alter the way they think about shipping in order to keep their rate hikes at a minimum.
However, there are some strategies retailers can take to reduce shipping expenses. Increasing the number of boxes and packaging solutions available to packers gives them more options and allows items to be placed in smaller boxes to reduce size. Multichannel Merchant explained some retailers began using weigh, measure, print, apply systems which perform these actions as packages move down a conveyor belt. This helps retailers to know exactly how their packages will add up with the new rule, and is good for those who had not yet been measuring their packages.