Because shipping and logistics are a core competency at Materialogic, we keep abreast of industry changes that might affect how and when people ship items, including how much they are likely to pay. One factor that is constantly changing is the way carriers such as FedEx and UPS calculate dimensional weight.
Dimensional weight determines the amount that businesses are charged for shipping and this can have a huge impact on the bottom line for businesses that ship often. The last major change to DIM weight, back in 2015, for example, meant that retailers paid on average 17% more in ground shipping costs.
At the end of last year, FedEx announced that effective January 2 of this year, it would shrink the “volumetric divisor” used to calculate dimensions of domestic parcels. This divisor has been 166 since 2011 but is now shrinking to just 139 for all parcels. This means a near-20% increase in the dimensional weight of most packages. UPS made a similar announcement earlier this year for shipments larger than one cubic foot.
Furthermore, this move is likely to hit small- and medium-sized businesses disproportionately. With past DIM weight increases, we have seen smaller players bear the brunt of higher shipping while larger companies and some 3PLs were able to leverage their volume to negotiate better deals with carriers (and knew how to do so). The current change, then, means that small- and medium-sized businesses have an incentive to look at 3PLs to take advantage of such discounts.
Last year, we provided other tips for mitigating shipping costs in the face of a rate hike due to DIM weight changes. That advice stands today. But we feel it worth repeating—and adding a few new tips into the mix:
When you are ready to have that conversation, you can reach out and contact me: