It shouldn't be surprising that UPS and FedEx eliminated the three cubic feet rule from their guide to parcel to squeeze more money from its shippers. If you are unfamiliar with the rule, prior to 2015, any box smaller than three cubic feet was exempt from cubic calculated weight. This was a standard set by parcel carriers that punish larger, less dense goods by providing it a billed weight instead of an actual weight. It is a pre-determined idea of what the density of a box should be, rather than what it actually is. They are ensuring parcel carriers are maximizing capacity and profits at the expense of the shipper.
But what does that really mean for the shipper? If you're generally shipping goods larger than three cubic feet, or 17.3 inches each dimensional direction, then the removal of this rule does not affect you. However, smaller parcel is getting slammed for this change. Three cubic feet, when applying the dim rule, becomes 31 pounds billed weight. In other words, if your box contains goods that weigh less than 31 pounds, your new minimum would be 31 pounds for that box. If your goods weighed five pounds, you could be losing a significant amount of money. Even with a 40% discount, shippers could lose $3 up to $14 per package based on a five pound actual weight package. The shippers who would be hit the hardest have long distance, lightweight shipments with large boxes.
So what can be done to remedy the situation if you happen to be on the wrong end of the table? Here are some options you or your team can explore to eliminate the problem:
- Study the size-requirements necessary for less than three cubic feet packaging. This step requires analysis of a shipper's packaging of goods and understanding what types of items and the volume of the goods going into a box.
- Migrate to custom size boxes. By using standardized boxes for goods, there could be excess space that is being filled with packaging material or empty space. Minimizing empty space and packaging for less fragile goods will decrease the dimensional weight and ensure savings.
- Contact CPC. Market knowledge and in-depth analyses are both strong-suits of CPC Consultants. CPC has the experience and market knowledge that entails a library of information that can help the shipper through negotiating and resolving dim issues utilizing a multitude of options beyond standardized boxes. We can surgically alter the terms and conditions to get the greatest reduction in costs. Best of all, CPC can identify and implement changes to lower your costs.
Whether or not you are impacted by this specific issue, it is always recommended that shippers go over their contracts with carriers each year to review clauses and possible exemptions that might expire during the year. Typically, there is a short window that carriers will honor rebates and reductions before the raised rates/changes are locked in. The shipper's shipping characteristics change every year, and CPC has the tools and resources to review and identify problem areas that require resolution and implementation. Review your contracts today and engage CPC immediately to protect yourself from costly additional charges.