FedEx is shaking up the shipping game in charging by package size

FedEx (FDX) is changing the way it charges to ship bulky packages; instead of charging by weight alone, all ground packages soon will be priced according to size, which effectively will raise prices on more than a third of its U.S. ground shipments.

Such a move would greatly affect bulky but lighter weight items like toilet paper and diapers, but the changes also would profoundly affect Web retail shoppers, who often buy multiple clothing or footwear items - perhaps with free shipping - then keep what fits and return the rest.

For Amazon (AMZN) and other big online retailers, shipping is already one of the biggest and most rapidly increasing costs; e-commerce retailers likely would be affected by differing degrees, with the biggest companies such as Wal-Mart (WMT), Walgreen (WAG) and Saks (SKS) having advantages in their ability to negotiate pricing with FDX.

UPS has not yet followed FDX's move, but the two companies historically have matched each other's price increases.

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Comments (7)
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
    Size matters
    8 May 2014, 08:33 PM Reply Like
  • User 12976141
    , contributor
    Comments (2) | Send Message
    UPS has charged dimensional weight for many, many years. USPS even does it. I'd be surprised if FedEx doesn't also. This is not news. This is established reality. Who wrote this? Someone who's been living in a dark cave for years?
    8 May 2014, 08:49 PM Reply Like
  • JD in NJ
    , contributor
    Comments (1635) | Send Message
    That was my first take on the matter. I know the concept of volumetric weight well, as I wrote code to calculate shipping rates for UPS back in the 1990s.
    8 May 2014, 09:29 PM Reply Like
  • Bouchart
    , contributor
    Comments (1174) | Send Message
    As someone who spent years auditing small parcel bills I can tell you that Fedex does currently charge for dim weight.
    9 May 2014, 11:52 AM Reply Like
  • no mattah matt
    , contributor
    Comments (6) | Send Message
    Fedex has been using dimensional weighing for over 20 years. Why is this news? Just that time of year for Fedex and UPS to announce 'small' pricing increases.
    15 May 2014, 11:41 AM Reply Like
  • green18
    , contributor
    Comments (3) | Send Message
    If I recall correctly (Been out of UPS since 2000) anything over 108" length and girth combined was automatically assessed a 50lbs. charge if it weighed under that weight.
    9 May 2014, 10:06 AM Reply Like
  • wtl
    , contributor
    Comments (4) | Send Message
    It's true that FedEx has been dimming packages for years -- on its air express service. What's NEWS is that they're going to start doing this for GROUND parcels, too. This is why the move has special significance for e-tailers and their customers, b/c ground is the preferred mode for the 'free' shipping that has become integral to online shopping.
    This change is definitely going to impact low-density items like diapers and paper towels, but these examples are pretty uncharacteristic of what moves by air and ground express. I expect that the real target is shippers who, for whatever reasons, use inefficient -- i.e., bulky -- packaging when they ship, perhaps b/c it's easier to use one box size instead of several. FedEx Ground's rule change will cause a re-thinking of that cost/benefit and shift the burden to the shipper rather than the carrier. I think you'll see even more use of padded envelopes and paks in place of cardboard boxes, since this will reduce cubic volume.
    I'm not sure why this would necessarily affect returns, since items like shoes and apparel are unlikely to dim out if efficient packaging is used. It will encourage retailers to combine items in the fewest packages possible.
    23 May 2014, 09:12 AM Reply Like
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