Monday, November 22, 2010

'Dim' Sum

Parcel Carriers’ New Dimensional Weight Policies Add Up to Higher Shipping Costs.

Happy New Year from FedEx. Their 2011 rate increase overviews have been announced, with UPS following suit, and the biggest change is not that your list rates are increasing (which they are), or that acccessorial charges are increasing (which they are). The newest change is how FedEx and UPS will calculate “dimensional weight.”

It’s a little like the Alternative Minimum Tax. On lighter, less dense packages, the carriers ignore their posted rate structures, and charge you more for your package taking up space and not weighing enough to generate the revenue they want. They take length times width times height, and divide by a number called the “dimensional factor”. The numbers vary, from air to ground and domestic to international, but in general, packages weighing less than nine lbs. per cubic foot get charged a dimensional weight.

For the coming year, the dim rate for packages that qualify will jump, and the number of packages that “dim out” will also increase, even apart from any official rate hike from the carriers. The actual cost to ship some large packages can jump as much as a whopping 90 percent, even before factoring in the annual list rate increase.

The bottom line is, it’s great for the bottom line of FedEx and UPS, not so much for yours. And from their perspective, the best part is the shipper won’t even see the additional charges, unless they know what to look for.

Kirk Shearer
TOTALogistix, Inc.
800-989-0054 x103

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