Dimensional Fee Rate Increase!

We had the opportunity to visit a potential client the other day to discuss how to improve efficiency in the shipping process and implement a Least Cost Routing technology, which allows the client to produce the “right” shipping label for every package.

Walking through the warehouse discussing the current process, we landed at the shipping stations and noticed all of the typical supplies including several large boxes (12 x 12 x 12). One particular box had a label attached and was ready to be shipped. Looking over the label, we noted that it was a two-pound Ground shipment going to Zone 5. Casually, we asked the shipping manager if he’d accounted for the Dimensional Pricing this package would surely be charged. Certainly, with all of the news surrounding Dim Weights being instituted by FedEx and UPS, shippers were aware of this effective Rate Increase and how to manage it.

Unfortunately, this particular shipper had not taken the steps necessary to account for Dimensional Pricing, which has now been fully incorporated by FedEx and UPS. I suspect this is the case for thousands of others, as well. Until now, Ground Packages less than three cubic feet were exempted from dimensional weight pricing, only Air and International packages were billed at the greater of either the actual or dimensional weight. Not the case anymore. For the foreseeable future, the Dim Weight Factor of 166 will be applied to all ground shipments. (The Dim Factor of 139 will be used for International shipments).

How did this affect the shipper above? Well, 12x12x12=1,728. 1,728/166=10.4. The label said two-pounds. In about one week, they will receive a bill for an 11-pound shipment. I’m sure you can imagine the look on the managers face when heard this.

It’s been said, “The best time to plant a tree was 20 years ago. The next best time is now.”

Now is the time to seriously consider incorporating approaches to build efficiency and manage costs in the warehouse as shipping fees continue to rise. Utilizing a multiple-carrier strategy and label printing technology that accounts for Dimensional Weight up-front are both very reasonable and affordable beginning solutions. Eventually, automated dimensioning equipment may also be warranted based on the size and scope of your operation.