Back in May FedEx announced that starting in January 2015 Ground packages will no longer have a 3 cubic foot dim waiver.

What this means is up until January 2015 a package that is under 3 cubic feet (5,184 cubic inches) is only billed by actual weight.  So in other words size does not play any role if the package is under 3 cubic feet.

 

SCENARIO:

BOX #1:  Lets say I get a very small item, that can fit in a 10x10x5 box and the total weight of the package is 1 lbs my rate will be based on a 1lbs.

BOX #2: Now lets get a 26x14x14 box and put that same item in if the total weight of the package is 1 lbs my rate will still be based on 1 lbs, even though the size of the box is almost 3 times as large as the previous one.

ALL OF THIS CHANGES ON JANUARY 1, 2015

In January FedEx and UPS will take away that 3 cubic foot dim waiver.

Lets take the same scenario mentioned above and calculate the rates.

BOX #1:  10x10x5 has a cubic size of 500 inches squared.  The current divsor for ground is 166.  We divide 500 by 166 and get 3 which is now our new dimensional weight!

BOX #2:  26x14x14 has a dimensional weight of 31 lbs! Even though the package itself weighs only 1 lbs FedEx and UPS will bill it at 31 lbs because of the space (volume) that the package takes up.  So if you have a large but light weight item you will see a very large increase in pricing!

 

RATE INCREASE PERCENTAGE (Based on FedEx Ground Commercial Pricing):

BOX #1: (1lb package measuring 10x10x5 inches)

Going to zone 8 = $7.71    (Current Rate for a 1lbs package that measures 10x10x5)

Going to zone 8 = $9.84   (Rate for the same package after January 1 2015)

That’s a 27% increase in pricing!!!

 

BOX #2 (1lb package measuring 26x14x14 inches)

Going to zone 8 = $7.71    (Current Rate for a 1lbs package that measures 26x14x14)

Going to zone 8 = $33.40  (Rate for the same package after January 1 2015)

That’s a 333% increase in pricing!!!

 

As you can see that is a HUGE rate increase especially for shippers shipping large but light weight items.

Don’t wait for January 1 2015 to start doing something about pricing.  Start implementing countermeasures today!

Call us today to see how we can help your company!