Over the past 10 years, shipping rates from all major carriers have steadily increased at an average of around 5.5 percent, mostly due to fee increases for specialized shipping. The fees are for services like third-party shipping, oversize packages and peak shipping, and they continue to rise. The other factor that has increased shipping rates is the steady lowering of the industry’s standard dimensional divisor, which affects the calculated dimensional weight of a shipment.
Dimensional weight is a calculation used by commercial shipping carriers to determine the cost a customer will pay to ship a package. Dimensional weight is also sometimes called volumetric weight or DIM weight. It is not the actual weight of the package, but instead a theoretical weight that allows shipping companies to assess a package and charge customers based on the amount of shipping space the package will occupy.
To calculate dimensional weight, the carrier uses a standard formula of length x width x height divided by a number called the dimensional divisor. The dimensional divisor is a standard number that is generally used across all commercial shipping companies. The higher the dimensional divisor, the lower the shipping rate.
Dimensional weight helps carriers pass along true shipping costs to customers. It favors small, dense packages, rather than large lightweight ones. A dense package makes better use of space in a shipping container or truck than does a less dense larger box, which takes up a lot of space without maximizing the load on the truck.
In late 2017, Fed Ex, UPS and USPS announced various rate hikes to take place in early 2018. These changes will mean that businesses with a high shipping volume may need to reevaluate their shipping practices.
FedEx announced that the dimensional divisor of 139 will now apply to all U.S. ground, Express and SmartPost shipments. Other increases include a $0.30 increase for residential delivery, a 12% average increase across all non-fuel related surcharges and a smaller limit for oversize packages. Learn more here.
UPS announced that the dimensional weight divisor of 139, will now apply to all packages (packages of less than 1 cubic foot previously used 166). Residential deliveries by air and ground will increase by $0.15 and $0.20, respectively. Additional handling surcharges will rise by $1.15 and oversize package rules are changing. Read more here.
USPS has not changed its DIM weight pricing, but has announced increases on postage, flat rate mailers and packages. You can find information on rate increases for items shipped via USPS here.
Shipping rates are likely to continue to rise in coming years, but there are ways that consumers and businesses can minimize their shipping costs as rates increase. One of the simplest ways to reduce shipping costs is to reevaluate packaging materials. Unique packaging solutions can solve many costly shipping problems. For instance, a bulky box with packing peanuts will most definitely cost more to ship by dimensional weight than a sleek padded mailer. Advancements in thermal barrier materials can reduce the size of containers used for shipping temperature controlled products, which previously relied on large coolers and bulky ice packs.
One way to quickly evaluate different packaging options is with PAC’s mailer vs. box tool. Simply enter the specifics about your package and you can see how different packaging will affect your shipping costs. The best way to understand all your packaging options is to consult with a trusted packaging provider who specializes in maximizing shipping efficiency. At PAC, we have industry professionals who can help you understand your shipping options and suggest products and solutions that can reduce your shipping costs, even as rates increase. Reach out to a packaging specialist today to see how you can reduce your shipping costs with unique packaging options from PAC.