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FedEx & UPS Introduce Density Pricing for 2015

Volume 2, Issue 12
June 30th, 2014
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Both FedEx and UPS are introducing dimensional pricing that could result in rate hikes of as much as 17-30% for larger shipments.

FedEx led off by announcing in May that starting Jan. 1, 2015, FedEx will price ground parcel shipments measuring less than three cubic feet by size rather than by weight.

DeliveryManUPS announced June 17 that as of Dec. 29 it will use dimensional pricing on all UPS Ground services. The company already applies this method for domestic and international air services.

The companies appear to be trying to reshape the packaging practices of e-commerce shippers, who may turn to less bulky and more efficient packaging practices to avoid the higher rates.

Both FedEx and UPS found themselves in the news following service failures at the tail end of the holiday shopping season brought on by a big jump in e-commerce driven by Amazon.com, which continued to promise two-day free delivery only days before Christmas.

Experts predict e-commerce growth will make this holiday season much worse. “The holiday season in 2012 was an issue. In 2013 it was problematic. In 2014 it is a train wreck coming at us,” said Chuck Moyer, CEO ofExpress Courier International Inc., a ground parcel delivery service in the South, at the mid-June eyefortransport 3PL Summit in Chicago during a panel discussion moderated by ACWI Advance Editor David Sparkman.

Other speakers at the Chicago conference predicted that next-day, same-day and even next-hour shipping are the wave of the future.Target reported mid-June it is testing same-day service in Boston, Miami and the Minnesota Twin Cities areas.

However unsustainable the free shipping model embraced by Amazon may be, industry executives like Moyer say e-commerce competitors are under pressure to continue offering free shipping as long as Amazon and Walmart continue to do so.

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