Small U.S. firms may struggle with new UPS, FedEx dimensional prices

Mon Dec 29, 2014 2:13pm EST
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By Nick Carey

CHICAGO (Reuters) - United Parcel Service Inc (UPS.N: Quote) and FedEx Corp (FDX.N: Quote) are rolling out new pricing systems to curb online retailers' large package sizes, but industry experts warn many small firms are unprepared and could pay up to 50 percent more for shipping.

Starting Monday, UPS will no longer charge for U.S. ground packages under 3 cubic feet by weight but by their "dimensional weight."

Memphis-based FedEx will roll out the same change on Jan 5.

Instead of simply weighing a box, retailers must multiply its length by its height and width, and then divide that by 166 to reach its dimensional weight.

"We believe this (dimensional weight pricing) will encourage customers to reduce their package sizes," Bill Smith, UPS vice president of marketing, told Reuters.

UPS and FedEx announced the change in May and have worked to help customers adjust. But some small firms lack the resources to change packaging and may switch to the U.S. Postal Service (USPS), said Amine Khechfe, general manager of Endicia, which offers shipping solutions for e-commerce vendors.

Under the new systems, according to Endicia, a woman's shoulder bag weighing 2 pounds – shipped in a box measuring 19 by 15 by 5 inches - will have a dimensional weight of 9 pounds and cost 45 percent more to ship.

Atlanta-based UPS says retailers are shipping lighter goods, but have not shrunk the size of their packaging materials.   Continued...

A United Parcel Service (UPS) delivery person prepares to deliver packages in the Manhattan borough of New York, December 23, 2014.   REUTERS/Carlo Allegri