Hello to All! :)
Over the past few weeks I have been hearing about and researching the new proposed rates for UPS, FEDEX Ground and the USPS. This will affect most every business in some way or another. We thought we would share with you what we have found, so that you can be prepared for the changes and not be surprised when you see your first bill after the new Dimensional rates kick in, in early 2007.
Here is what we know, although we suggest you confirm this information with your UPS representative, FEDEX representative or Local Postmaster for confirmation to be sure all is accurate. Also, from what I read, these new rates are "proposed rates", to take place in 2007.
Looks like in 2007 UPS, FEDEX Ground, and the USPS will change the way packages are measured and billed. All three carriers are implementing a new (new for ground packages) dimensional weight system.
How will this affect sellers? It will greatly affect those sellers that ship larger, lighter items.
Lets look at an example. Lets take a package that weighs 3 lbs and measures 20x20x12. (By UPS, FEDEX GROUND and USPS Priority mail standards, this is currently not considered an oversized package and ships at the 3 lb rate.)
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USPS Priority Mail:
This item can be shipped currently to zone 1 for $5.00, to zone 8 for $9.00. At the new dimensional weight, for the same product, it would be charged at the 25 lb rate! To zone 1, at the current rate a 25 lb package via Priority mail is $17.30, and the same package to zone 8 $47.40.
Here is how the dimensional weight will be calculated for the USPS Priority Mail.:
How to Determine a Priority Mail Dimensional-Weight Price
For rectangular (box-like) items, measure the length, width, and height. The length is always the longest dimension. Round off each individual measurement to the nearest whole inch (20-1/4 inches is considered 20 inches; 20-3/4 inches is 21 inches). Next, multiply the length by the width by the height. The result is the cubic capacity expressed in cubic inches. If the result is 1,728 cubic inches or less, the parcel is less than 1 cubic foot and dimensional weight pricing does not apply. If the result exceeds 1,728 cubic inches, divide it by 194 (the "dim factor") to determine the dimensional weight. Round up any fraction of a pound to the next whole pound to get the dimensional-weight price for the parcel. If the actual weight of the parcel exceeds the dimensional weight, base the price on the actual weight.
Example:
20 x 20 x 12 = 4800
4800 / 194 = 24.74 pounds
24.74 rounded up is 25 pounds
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UPS GROUND:
From the UPS website:
Effective January 1, 2007, Oversize charges for larger packages shipped via UPS Ground services will be replaced with a simpler rate calculation based on dimensional weight. Dimensional weight will only apply to UPS Ground packages measuring three cubic feet (5,184 cubic inches) or larger. Packages measuring less than three cubic feet will continue to be billed based on actual weight. As a result of this change, dimensional weight charges will gradually increase as the package size increases, eliminating significant steps from one Oversize tier to the next.
How To Measure Cubic Size
To determine if dimensional weight pricing applies to your package, you must first calculate its cubic size. Follow these steps:
Measure the length, width and height of your package. Round each measurement to the nearest whole inch. (For example, 1.00" to 1.49" will be considered 1 inch, and 1.50" to 1.99" will be considered 2 inches.)
Multiply the length by the width by the height. The result is the cubic size of your package.
How To Calculate Dimensional Weight
Once you have calculated the cubic size of your UPS Ground package and have determined that it is 5,184 cubic inches or greater, you are ready to calculate the dimensional weight. Divide the cubic size of your package by 194 rounding up to the nearest full pound.
UPS Domestic Ground Service
L x W x H / 194
Billable weight will be based on either the actual weight or dimensional weight of your UPS Ground package, whichever is greater.
---end UPS website---
Lets look at a 20"x20"x20" package. Currently is considered oversized and if weighs less than 30 lbs is billed at the 30lb rate. Currently if it weighs over 30lbs, it is billed at its actual weight.
20x20x20=8000 / 194 = 41.23 So a 20x20x20" package currently billed at the 30lb rate will jump to a 42 lb rate
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FedEx Ground:
From the FedEx website:
FedEx Ground Dimensional Weight Rate Calculation (Effective February 5, 2007)
For FedEx Ground shipments, a rate calculation based on dimensional weight may apply for packages that are 3 cubic feet (5,184 cubic inches) or larger. These packages will be billed based on dimensional weight unless actual weight is greater. Packages smaller than 3 cubic feet will be billed based on actual weight.
---end FedEx Website---
Lets look at a 20"x20"x20" package. Currently is considered oversized and if weighs less than 30 lbs is billed at the 30lb rate. Currently if it weighs over 30lbs, it is billed at its actual weight. 20x20x20=8000 / 194 = 41.23 So a 20x20x20" package currently billed at the 30lb rate will jump to a 42 lb rate
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Here are the links to the delivery services press releases on their websites. The USPS will use dimensional weight for anything over 1 cubic foot, UPS and FEDEX will use dimensional weight over 3 cubic feet.
USPS:
http://pe.usps.com/DMMAdvisory.asp?Dest=dmmadvisory103006.htm
UPS: http://ezsnip.com/x.php?o3
FedEx Ground:
http://images.fedex.com/us/rates2007/DimWeight.pdf?link=4
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I am surprised that this has not been in the media or talked about much online as of yet, not that I have come across. This will affect a large portion of sellers of all sizes. Sellers need to be educated now, as these new rules take effect as soon as in January 2007 for UPS. FedEx Ground February 2007 and the USPS Priority Mail in Spring 2007. Some sellers may be able to break down their offerings into multiple smaller packages, instead of shipping one large package and paying the higher rate.
We suggest that you take this time before the new dimensional system kicks in and measure your packaging and if this affects your business start finding alternative ways to package or ship your product. In some cases, if your product can be broken up into multiple boxes, it may be cheaper to ship this way than one larger box. If not see if your product can be resized.
Sorry to be the bearer of possible bad news. I just wanted to share what I have found out, as it doesn't appear that the carriers are educating us, their clients, about these changes. If I can be of any help, please do not hesitate to send me an email.
Thanks again for being our customer, we appreciate your business very much and wouldn't be were we are now without you!
sincerely,
Jason Archambault
President
Fastpack Packaging Inc.
www.fast-pack.com
www.fastpack.net
P.S. If you would like to add to the above information or would like to a a comment, please feel free to do so by clicking on the comment button below.
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