We are already used to seeing yearly increases from both UPS & FedEx that affect our costs substantially. As usual, both carriers are announcing an approximate 5% increase to their respective base rates for 2017. These changes are coming on December 26th and January 2nd for UPS and FedEx respectively. Changes will be for both ground and express services.
Residential surcharge increases for 2017
What is not always easily recognized, however, increase to other related fees? For 2017, residential surcharges are going up as well. Both UPS & FedEx will increase their rates on various charges, including the residential surcharge. The rate for residential surcharge is increasing by $0.15 for UPS and $0.20 for FedEx, resulting in charges of $3.50 for UPS and $3.45 for FEDEX. For E-commerce sellers, this increase could substantially increase your bottom line shipping costs.
Changes to dimensional weight from FedEx & UPS
An even less recognized change is coming for FEDEX and has already been implemented for UPS, dimensional weight formulas. Dim Weight is a very confusing and with various parameters, it would be easy to not understand the actual weight you are being billed for. How dimensional or “volume” weight works is that if your box size reaches a certain size, you may be charged for a higher weight than the actual weight. The result is much higher than expected costs for shipping. Dimensional weight has always been factored in with small package shipping. What you may not know is that both FEDEX and UPS have recently changed the formula for domestic shipments. Up until recently, you would use the formula of L X W X H divided by 166. So for example, a box weighing 3 lbs, with dimensions of 12” x 12” x 10” was rated at a billable weight of 9 lbs. Now both carriers are using a 139 divisor. So the same box will now get billed at 11 lbs. It doesn’t seem like a lot, but higher billable weights could result in an increase of up to a 25%!
What you can do
More now than ever, it would make sense for all shippers to explore alternate options for their small parcel shipments. For E-commerce shippers, FEDEX, UPS, and USPS all offer residential services that may offer shippers better options for residential deliveries instead of the traditional ground to home services. Also, some of these services do not utilize dimensional weight for certain weight ranges.
In addition, it is always best to look at how you package your shipments. Utilizing the smallest boxes possible for lighter weighting shipments could make a huge difference.
The good news is that Sologistx can help you find the best solution to offset these increases and ship most efficiently. Contact us at info@sologistx or 866-430-7020 for a no cost shipping review.