UPS and FedEx changed their shipping rules in 2015 to charge packages based on dimensional weight rather than just actual weight. This means packages will be charged based on whichever is greater - actual weight or a calculated dimensional weight which considers the package dimensions. This affects retailers and shippers who will now pay higher rates, and consumers who may see increased online shopping costs as companies pass on these higher shipping fees. To adapt, businesses need to invest in technology to better optimize package sizes and collect shipping data, while consumers should shop smarter and understand the true costs of shipping items.

1. UPS/FedEx
Changes in 2015 Shipping Rules

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4. Before
the policy change
After
the policy change
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3.25
Packages are charged
only by weight up to
3 cubic feet.
+
3.25
Packages are charged
by weight and volume.
This is called DIM, or
dimensional weight.

5. Why the change?

6. Before
the policy change
After
the policy change
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UPS
1,200 lbs / 2,500 lbs
UPS
2,500 lbs / 2,500 lbs
( Assumes by weight only ) ( Assumes DIM weight more than acutal weight )

7. UPS
1,200 lbs / 2,500 lbs
UPS
2,500 lbs / 2,500 lbs
Before
the policy change
After
the policy change
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Many shipping cartons
contain items that are large
but are very light in weight.
This is more costly to ship
for the carriers.
Shippers are able to charge
for specific combinations
of weight and dimensional
calculations.

8. How it works
Actual weight is compared to the DIM Weight,
which is calculated by L x W x H / 166 (DIM Factor).
Your shipping cost is based on whichever is greater.
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+
L x W x H / 166
( DIM factor)

9. Who will be affected?

10. Who will be affected by DIM weight?
First: Retailers and shippers
who dispatch small to medium sized
packages via ground will now pay at
rates previously limited to air and
international freight. Noncompliance with
new packaging standards may also incur
shipping delays and fines. All new costs
will ultimately trickle down to consumers.
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11. Who will be affected by DIM weight?
Second: Consumers
Online shoppers- Free shipping could go
away, or product cost could go up.
Consumers will absorb costs.
Thought: online model may need to
calculate real shipping costs or add to
base product cost to cover new
increases in cost.
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$$$

12. How do we adapt?

13. How do we adapt?
Invest in warehouse automation, scanning and measuring tech.
Invest in a variety of supplies. e.g. Different sizes of boxes/packages.
Ideas from solution perspective: Data collection on all SKU data to know
beforehand what package size will need to be in conjunction with
software that optimizes total pack size for multiple pieces.
Outbound side: capturing data in real time of actual shipping weight and
dimensions to pass on actual charges (if shipping does not have a fixed
shipping cost and pass on actual costs).
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14. How do we adapt?
Consumers shop smarter.
Understand your real costs.
Know the rules before you
ship something.
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