Beginning in January, both UPS and FedEx will be changing their pricing structures, effectively raising their prices for many.
They're doing this to decrease the number of large packages that online retailers ship. According to Reuters, both companies will be charging packages by their dimensional weight. This means that instead of weighing a package, retailers must find the dimensional weight by multiplying a box's length by its height and width and dividing that number by 166.
"We believe this (dimensional weight pricing) will encourage customers to reduce their package sizes," said UPS Vice President of Marketing Bill Smith to Reuters.
FedEx and UPS announced this change in May, and have been helping companies adjust their packaging to meet the new standards in a cost-effective way. However, smaller e-commerce retailers may have a more difficult time accepting the change, since they most likely have fewer resources to devote to switching to new packaging that satisfies the measurement requirements. As a result, these companies may take their business to USPS, which still charges by weight and even announced price cuts in July to target online retailers.
UPS spokesperson Jess Bunn told Reuters that lately online retailers have been shipping lighter goods but have not reduced the size of their packaging material. The raise in price is expected to offset fuel costs involved in shipment and delivery.
"We need to charge a fair value for use of our asset, which in this case is space," he said.
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