During a discussion about the various iterations of dimensional weight in our presentation at the 2016 PARCEL Forum in Dallas, I made the (ahem… dare I say, "bold") prediction that at some point the carriers will align the domestic and international dim divisors rather than having unique divisors for each. Little did I know that just one week later, FedEx would proclaim that very change in its 2017 rate announcement (mental note – buy a lottery ticket tonight). Why align them, and why 139 instead of 166? The latter question is fairly obvious, since it allows them to squeeze more revenue out of the same carton for the lion’s share of their volume rather than provide some relief on international shipments. While the former question may be a little less obvious, it’s not a particularly hard one to answer – why are they different in the first place? “Industry standard” is the likely response you’d receive, but the “standard” is somewhat arbitrary. At some point in time, someone decided that a certain sized carton should weigh at least a certain amount. There was no doubt a method to the madness, but it was by no means a universal truth.
So what does this change mean specifically? For one thing, it means that, unless you have a custom divisor, a one-cube (12x12x12) box will be billed at least 13 pound. How many one-cube shipments does your company have that weigh 13 pounds? This is fairly heavy. Currently (with the 166 divisor), this same box would have only been billed at a minimum of 11 pounds. Just a couple years ago (194 divisor), it would have been nine pounds. And only a couple years before that (no divisor) it could have been as little as one pound, so while this single change may seem benign to some, the dimensional trend has been a painful one for shippers of all sizes.
Let’s use some examples using 2016 rates:
· A zone-8, one-cube commercial ground shipment will be billed a (published) minimum of $18.22 instead of $16.19 – a 12.5% increase (to be fair, a zone 2 shipment would only increase 4.0%). Just a few years ago (still using 2016 rates), this same zone-8 package could be have billed as little as $8.66 (I’ll let you do your own math).
· This same zone-8 carton shipped Priority Overnight will be billed $151.27 instead of $136.92 – a 10.5% increase.
This is on top of an average 3.9% rate increase. (Ouch!)
What are your options? In addition to considering regional carriers which may have more favorable dimensional rules, the most obvious is to pursue remedies within your carrier agreement. Beyond that, it’s worth evaluating whether or not your packaging is optimized for your product. Working with your product vendors, corrugation providers, or (yes) UPS/FedEx to better design your cartons to reduce wasted (and expensive) space, while simultaneously ensuring product integrity, is another option. Although package design/engineering can be costly on your own, the aforementioned providers can help defray some or all of the cost depending on your situation and relationship.
It’s worth noting that as I am writing this, UPS has not indicated whether or not they intend to follow FedEx’s lead in this change. Any bets? Maybe I should buy two lottery tickets instead.