Small businesses have grown accustomed to seeing carriers increase shipping rates each year, which has forced them to ship and package smarter to reduce costs.
In particular, the size of a package and how much space it occupies on trucks — calculated by the dimensional weight — has been a focus of carriers as they look to pack their vehicles as much as possible.
And now another key change in the formula used to calculate dimensional weight by one major carrier will force shippers to again re-evaluate how efficiently they package items.
“The reality is, with the explosion of online shipping and people buying products that are taking up space in the carrier’s trucks, carriers are trying to maximize the cubic square feet of that vehicle,” said Tony Nuzio, founder of ICC Logistics Services Inc., a Hicksville transportation consultant.
Last year, both UPS and FedEx began applying dimensional weight pricing to all ground shipments, said Nuzio. Previously, it was applied to ground packages 3 cubic feet or greater, he notes.
Dimensional weight reflects package density. In general, it’s calculated by multiplying a package’s length by width by height and then dividing by a set dimensional divisor, said Nuzio.
A shipper’s billable weight of a package is based on whichever is greater — the package’s actual weight or dimensional weight, noted Rich Michals Jr., president of Parcel Management Auditing & Consulting in Farmingdale.
The dimensional divisor used to calculate dimensional weight is presently 166 for domestic shipments and 139 for international shipments for both UPS and FedEx, says Michals.
But starting on Jan. 2, 2017, the FedEx Express and FedEx Ground U.S. domestic dimensional weight divisor will drop from 166 to 139, which could result in an increase of up to and potentially over 16 percent in dimensional weight for shippers, he noted.
UPS didn’t follow suit.
So for example, with the change, a package of 3,600 cubic inches divided by the 166 divisor would have a dimensional shipment weight of roughly 22 pounds (rounded up) vs. approximately 26 pounds if the 139 divisor was applied. That difference would increase costs on that particular shipment roughly 15 percent, says Michals.
Some experts say using the same divisor for domestic and international shipments can create consistency for shippers.
FedEx said in an email to Newsday that in general, dimensional weight pricing “puts greater emphasis on more efficient packaging, which eliminates unnecessary waste.” The statement added: “Better packaging also allows for more efficient use of our trucks and planes, which means less environmental impact from fuel emissions.”
FedEx offers customers free Packaging Lab help to engineer their packaging to be most efficient.
Jim Haller, program director of transportation services for NPI, an Atlanta spend management advisory firm, suggests businesses approach their FedEx representative and ask for some relief or period of time to make adjustments in packaging to accommodate the Jan. 2 change.
See if you’re truly maximizing the use of each carton, he says.
That’s what Fashioncraft, a Holbrook wholesale provider of wedding and event favors, did last year with the help of Parcel Management in Farmingdale. Fashioncraft did an analysis of what size boxes it should carry and trained its shipping workers to pack more efficiently, chief information officer Jeff Wells said.
The company now carries a variety of different sizes of stock boxes to avoid using larger boxes than necessary.
“We’re trying to minimize the impact of dimensional weight,” Wells said.
Other tactics to consider include utilizing regional carriers, which may not have the same dimensional weight restrictions that FedEx and UPS have, and using the United States Postal Service when possible, says Nuzio.
And consider perhaps purchasing boxes with insulated liners or other built-in shipping reinforcement, added Michals. This could reduce the need to add padding and could result in cost savings.
Size Does Matter
In June, both FedEx and UPS started charging an additional handling fee on U.S. ground packages with the longest side exceeding 48 inches. (It was previously 60 inches before the surcharge was applied.)