Major Shipping Rate Changes Announced: What eCommerce Companies Need to Know

Monday, May 12th, 2014
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Size matters.  That’s what FedEx and UPS are telling us with recent rate calculation changes announced this year.  Effective January 2015, all ground packages will be subject to “Dimensional Weight” pricing, rather than just actual weight, to determine shipping rates.  Until now, this pricing was reserved for large ground shipment boxes (greater than three cubic feet) and express shipments.  What this truly means for eCommerce companies is that box sizes for all shipments are going to become very important!

First of all, what is dimensional weight?  It’s a theoretical weight for a package, based on the package size or dimensions (height, width, and length).  It protects shipping carriers from losing money filling their trucks with large but light weight shipments.

In 2015, carriers will calculate both rates for shipments: the dimensional weight  (formula shown below), and the actual weight.  The rate charged (the billable weight) will be based on the higher value.  For example, if a dimensional weight is ten pounds, but the actual weight is eight pounds, you will still be charged for a ten pound package.  If the same box were filled with 12 pounds of goods, the actual weight would exceed the dimensional weight, and thus the actual weight of 12 pounds would be charged.

How to calculate dimensional weight (Dim Weight):

Domestic* Dim Weight Formula:

Length x Width x Height / 166

•    Example Box A: 12”x12”x12” = 1728 cubic inches / 166 = 10.41 lbs dimensional weight
•    Example Box B: 9”x9”x9” = 729 cubic inches/166 = 4.39 lbs dimensional weight
•    *International dim weight formula is Length x Width x Height / 139

What this means for you:

• Always enter your box sizes in your eCommerce system.  Without this box information, your system would be unable to pull in accurate real time rates when these new changes go into effect.  If you are a Nexternal client, you may do this in Settings / Compatible Software / Online Shipping Tools / Preferences / General Options (or ask your Account Manager for assistance).
• Notify and train your shipping staff.  Not everyone needs to understand dimensional weight, but you should let them know that package weight is no longer the key determining factor for ground shipment rate.  Tell them how important box sizes are going to be in 2015.  Also, make sure they know that changing box sizes will likely change rates (many people don’t know this).
• Pack as much as you can safely fit into each box.  Every inch counts!  Ensure that your packing materials are plentiful enough to protect your items from damage, but as compact as possible to fit into the smallest possible box.

For your reference:

Dimensional weight for some popular box sizes

excel lanette

Lanette Willis is a Senior Account Manager at Nexternal. Before joining Nexternal she spent nearly a decade working in market research and professional services marketing, before running her own successful eCommerce apparel business. Lanette is passionate about helping people and businesses thrive.