Strategies for Managing the FedEx Dimensional Weight Change Federal Express recently announced that it would be implementing dimensional weight pricing on its ground shipments effective January 1st, 2015. What is dimensional weight pricing? Dimensional weight pricing takes the space of the package and converts into pounds. Shippers are charged the higher of the actual weight of the package or the implied DIM weight of the package. Dimensional weight pricing has been a standard for air shipments and international shipments. UPS and FedEx rolled out dimensional weight pricing in 2007 for ground shipments over 3 cubic feet or 5184 cubic inches. In addition, both companies apply a large package surcharge for shipments greater than 165 inches. UPS is expected to change dimensional weight pricing as well. The US Postal Service also utilizes dimensional pricing; however, it is based upon zones and is more complicated. If you are a FedEx customer, here are some steps that you can take to prepare your firm for the upcoming changes. More to follow this when UPS announces its approach to dimensional pricing.
Parcel Contracts: Review and understand your parcel contract. Do you have an in-depth knowledge of the terms and conditions of the contract? Do you know your annual small package spend? What is spent by individual each of your product lines: express, ground and international? What are the shipping patterns and what is the volume by zones? You may want to consider zone skipping? Knowledge is power and your firm needs to understand what it ships and where it ships. What is your current package discount and is it tied to specific volumes? Be mindful of accessorial charges, last count FedEx and UPS had 44 different types of accessorial charges. Examples of accessorial charges that can add up quickly are oversized package charges and rural delivery surcharges.
Packaging: Conduct an in-depth review of your packaging. Many companies utilize seven or eight different size boxes. You may need to change your packaging by utilizing flat boxes or envelopes for small light weight products and get rid of dead space after allowing for protection. Accurate product dimensions are extremely important. It is important to have accurate product dimensions stored in your warehouse management system.
Data Analysis: Information is power. It is extremely important that your firm have a shipment history with product type, zone, charges, dimensions and weights. If you don’t have your shipment history, ask your parcel carrier to provide this information.
Processes and Procedures: Shipping Manual with documented processes and procedures on how to package and ship products should be a requirement for your business. With the dimensional weight changes, small light weight items packaged in large boxes will incur a dimensional weight charge. Your firm will be spending additional money. In addition, your firm may want to review and see if some express shipments can be sent via ground reducing costs. Training of the shipping team is extremely important to keep costs in check
By James Bisaha, Senior Consultant – Supply & Logistics June 12, 2014 www.transconsulting.com