At the beginning of 2015, UPS and FedEx introduced a new pricing model for all ground shipments called “dimensional weight pricing.” Package dimensions – length, width and height – are now a major factor when determining shipping rates for both of these small parcel carriers. Organizations across the globe are now discovering that this change is quickly having an undesirable effect on their business – a significant increase in shipping costs.
Shipping experts are predicting that these rate changes will ultimately result in a 20 to 30 percent increase in small parcel shipping costs. Consequently, many businesses are scrambling to find ways to offset these increases as quickly as possible. If supply chain executives do not adapt to this change, UPS and FedEx will put an additional strain on profit margins that are already difficult to maintain.