FedEx has announced rate changes for its FedEx Ground shipments, which will have a big impact on online retailers, and customers.
On January 1, 2015, FedEx Ground will start including dimensional weight to their rate charges for all shipments; at the moment, FedEx Ground only applies it to packages that measure 3 cubic feet and up. Dimensional weight pricing is a standard industry practice that establishes the transportation rate based on the volume of the package and the amount of space a package takes up in respect to its actual weight.
By changing the way they charge to ship bulky packages, FedEx will be impacting e-commerce websites with hefty price increases for delivering bulky products that require bigger boxes like paper towels, toilet paper, etc. Now, instead of charging by weight alone, ground shipments will also be priced in accordance to size, meaning a price increase on over a third of its ground shipments in the U.S. Once these changes take place, consumers will think twice about purchasing bulky items that require larger boxes because with the added costs of shipping by dimension as well as weight will eliminate the savings.
What It Means to Online Shoppers
The rate increases are going to shock consumers who, over the last few years, have gotten used to being able to order products online at reduced prices and the convenience of having online retailers deliver household essentials directly to them, bypassing the need to pick them up at a brick and mortar store themselves. In many cases, consumers even get free shipping by using money saving programs like Amazon Prime (provides free delivery to its members) or taking advantage of offers of free delivery for orders that are over a specified dollar amount. At the moment this is a convenience consumers enjoy, having their purchases delivered directly to their homes for basically the same (or less) than they would pay for going to a brick and mortar store to purchase their necessities. While this is a convenience for them, FedEx has evidently determined that these types of shipments aren't profitable for them. Bulky yet light packages take up a lot of truck space, space that FedEx would rather fill with additional packages that they can charge for. You can count on other shipping companies like UPS to eventually come to the same conclusion.
Dimensional weight rates are a standard industry practice that sets the transportation price dependent on package volume (the amount of space a package occupies in relation to its weight). UPS also uses dimensional pricing for a number of shipments. If history repeats itself, you can bet that FedEx and UPS will eventually match each other’s pricing strategies. Even now, shipping and special handling rates are essentially identical and UPS Standard rates currently match FedEx published rates to the penny.
The pricing changes have the potential to dramatically affect, retailers, shoppers and the individuals who simply want to ship packages for any reason, whether its holiday gifts or care packages to their children attending college. Shipping charges are already one of the most rapidly increasing costs for online retailers, an aspect reported in Amazon.com, Inc.' s testing of its own shipping service.
You'll want to plan ahead when it comes to shipping your packages or buying products online come January 2015, keeping in mind that using the proper size corrugated cardboard shipping box can cut down on what you pay for shipping. One size no longer fits all when it comes to FedEx rates; just using a box that is 1" or 2" too large will end up costing you more to ship meaning it has become crucial to use the right sized box.