FedEx recently announced it would be making changes to its shipping rates, effective Jan. 2, 2017.
One of the biggest changes, and of particular importance to shippers, is the introduction of a new dimensional weight (DIM) divisor. Package shipping rates are determined either by their actual weight or their calculated DIM weight. The larger of the numbers is the one that determines how much it costs to ship.
Currently, the DIM divisor is 166. This means that a 12- x 12- x 12-inch package’s calculated DIM weight is 10.4 pounds, which is rounded up to 11 pounds. If the package weighs more than this, the shipping rate would be based on its actual weight. If not, the package is charged as if it weighed 11 pounds.
The new DIM divisor will be 139, which can significantly affect the DIM weight of a package. That same 12- x 12- x 12-inch box would then be calculated to 12.4 pounds and rounded up to 13 pounds.
E-commerce affected by DIM change
Shipping consultant Jerry Hempstead said in a recent Multichannel Merchant article, “Many shippers redesigned their packaging when FedEx changed the divisor from 194 to 166 in 2010,” Hempstead said. “Now they’re faced with this again but it applies to far more shipments because so many of them are small, and ecommerce transactions tend to be over-packed.”
The publications website went on to say, based on Hempstead’s calculations, the new FedEx DIM divisor will hit every package larger than 8- x 8- x 8-inches, bumping up the billable weight and thus the charge.
The most recent change in the divisor means that companies will once again have to review their package size and weights. The challenge this time around is that the impact may be even more far reaching because many ecommerce packages may try to put multiple items into smaller boxes to reduce shipping costs. However, this approach may end up increasing damages if the boxes are ill fitting and/or not well protected.
As consumers continue to make more of their purchases virtually rather than in-store, companies will have to make adjustments to their packaging strategies to remain profitable.
Keeping costs low
To combat the rising rates, companies would benefit from looking into options to keep their packages smaller and more condensed. This opens the door to a variety of strategies. In some instances, it may even make sense to redesign the product. In order cases, modification to the primary package which could be a carton, could positively impact DIM weight. Regardless of the approach, selecting the correct protective packaging materials to protect the shipment and not adversely impact DIM weight is critical. Performance-driven protective packaging should help minimize space requirements while also keeping the items cushioned, secure and damage-free.
One example of this is the hybrid cushioning line from Pregis, an air cushioning packaging solution that offers significant product protection. The hybrid cushions come in three sizes, the largest being 1 ¼ inches tall and offers both block and brace and cushioning attributes.
For more information about how your company can optimize packaging material and keep costs low, contact Pregis. Our experts will be able to analyze your current operations and make helpful suggestions on where you can improve.