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by RS Associates

FedEx Change to Dimensional Weight Rule

There’s a lot of buzz going on in the industry over FedEx’s recent announcement to change the rules regarding dimensional weight and when it’s applied.  We’ve posted several articles in the “Industry News” section of our website, but for those who are not aware, here is the issue:

As of the date of this writing, UPS and FedEx follow the same rule regarding dimensional weight on ground-service shipments.  That is, if a package measures 3 cubic feet or less, it is not subject to dimensional weight—the carriers charge for the actual weight, plus any applicable fees (residential, DVP, remote area, etc.)   Note: all UPS and FedEx air service shipments are subject to dimensional weight.

FedEx announced that as of January 1, 2015, all FedEx Domestic Ground Service shipments will be charged for either the actual weight or the calculated dimensional weight, whichever is greater.  This proposed rule change represents a significant potential increase in price for [millions] of packages.

So the ensuing online discussion boards have been lighting up with questions and speculation about what could-would-should-might happen across all carriers as a result.

Following are some of the possible scenarios being discussed:

  1. UPS could announce a similar rule change and create pricing parity with FedEx
  2. UPS could take advantage of the announcement and pursue existing FedEx customers to switch due to the perceived price advantage
  3. FedEx could enact the rule as scheduled for smaller volume shippers, but waive the rule for big shippers like Amazon
  4. UPS could adopt the same rule, but also provide waivers to higher volume shippers
  5. USPS does not have this dimensional weight rule.  If they maintain their position while FedEx and UPS adopt the same rule, USPS is likely to see a significant shift in package volume away from FedEx and UPS
  6. If UPS does not adopt the same rule as FedEx and FedEx sees the non-action as a competitive disadvantage, FedEx could walk-back the proposed rule change (many industry experts suggest FedEx made the announcement relatively early in order to see how the competition will respond before making the rule permanent)
  7. As a shipping “monster”, Amazon could elect to deliver their own shipments in major metro areas where they have distribution, effectively making the new rule moot. Other super-high volume shipper may also look at alternatives

Obviously, no one knows exactly what will happen here, but we are all intensely interested in precisely how this will impact the Retail Shipping industry.

RSA is in regular contact with both UPS and FedEx.  We’ve posed all of the “what if” and “how will this impact retail shippers” questions.  No concrete answers yet, but keep your eyes and ears open.  Watch for the news posting on our website, and READ YOUR EMAIL as this is RSA’s best tool for making time sensitive industry announcements and alerts.

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