Its only a short time before UPS implements new base rates for the year 2007. The January increase is something of which we are all acutely aware. But there may be one other pricing change whose announcement back in September may have eluded you. I am referring to the decision made by UPS to replace Oversize pricing with Dimensional (Dim) Weighing.

According to the UPS Press Release, effective January 1, 2007, oversize charges for large packages shipped via UPS Ground services will be replaced with a simpler rate calculation based on dimensional weight. The operative word is simpler. As I am sure you know, the word simpler comes from the Latin word simpleue which means run for your life. Actually, its a well-known fact that soldiers in the 7^th Calvary of the U.S. Army screamed simpleue during the Battle of the Little Bighorn. After you read this column, if you ship oversized packages, you will be screaming simpleue in your sleep, or at least during your budgeting meetings.

There is a certain irony for any parcel carrier to use the word simpler to describe any area of their pricing structure. I am sure youd agree with me when I write that there is nothing simple about parcel pricing. Carriers use tiers, thresholds, surcharges, etc. to confuse the masses and maximize profits. So why should it be any different for oversize packages? The majority of my clients request assistance in understanding and deciphering their carrier proposals and agreements.

The change begins with the dropping of length and girth as the basis for determining oversize packages. Beginning in January, you must focus on cubic inches to determine oversize packages, or length x width x height (in inches). Dimensional weight rates are applicable only to UPS Ground packages that are three cubic feet (5,184 cubic inches) or larger. Packages smaller than three cubic feet will be billed based on actual weight. For example, a package with dimensions of 12 x 12 x 35 or less would not be subject to dimensional weighing, while a package with dimensions of 12 x 12 x 36 or larger would be subject. For those packages equaling or exceeding three cubic feet, billable weight will be based on actual package weight or the dimensional weight, whichever is greater.

Once you have calculated the cubic size of your ground package and have determined that it is 5,184 cubic inches or greater, you are ready to calculate the dimensional weight. Divide the cubic size by 194 (166, for Standard to Canada), rounding up to the nearest full pound. Lets consider two examples:

                                                              A                                           B

      Cubic inches                                 5,184                                      5,040 

      Actual weight                              10 lbs.                                    10 lbs.

      Dim weight                                  27 lbs.                                     n/a

      Billed weight                               27 lbs.                                     10 lbs.

As this example shows, there may be severe repercussions (namely, increased pricing) to your current shipping costs if you are impacted by the replacement of oversize pricing with dimensional weighing. But heres the gut wrenching punchline; you can expect to pay more to have UPS service your oversize packages. Let consider the following examples:

 

	Package Dimensions	(inches)	Cubic	Length &	New	Old
Length	Width	Height	Inches	Girth	Dim Wgt	O/S Wgt
12	12	36	5,184	84	27	30
15	12	36	6,480	90	34	30
12	18	36	7,776	96	41	30
15	18	36	9,720	102	51	30
12	24	36	10,368	108

As you can see, the impact of the new dimensional weight method significantly increases the weight and thus, the cost to ship via UPS. And to further fan the fire, don't forget the added cost impact of greater fuel surcharge. What is sold as a simpler rate calculation turns out to be a new source of revenue windfall for the carrier. You can rest assured that Big Brown thoroughly calculated the extra revenue they would enjoy by implementing this change. They leave nothing for chance. Nobody ever said life was fair! That's especially true when you are dealing with parcel carriers. SIMPLEUE!
 
Joe Loughran is President of SmartTran, Inc. and an expert in package carrier rate analysis.  SmartTran is a transportation consulting company offering services in carrier rate negotiation, guarantee refund service and logistics planning for 10 years. SmartTran's management team has over 60 years of experience in package transportation management. Joe can be reached by phone at 724-934-0626 or by e-mailloughran@smarttran.com.