###### June 2, 2016 in resources

### Dimensional Discounts and Surcharges

In the last few years, all parcel conversations have come back to dimensions. With the introduction of the dimensional charges in 2015, UPS and FedEx customers saw a large increase in their shipping costs for many items, and it seemed difficult to get a hold on which items got charged and why. When the USPS followed suit with its own dimensional rules, things got even more complicated and confusing.

This article on dimensional discounts and surcharges attempts to break down the reasons, rules and effects of dimensional pricing, and what a shipper can do to ease the burden.

**UPS and FedEx Dimensional Pricing**

People often wonder why Dimensional charges are even added in the first place. For UPS and FedEx, these surcharges are the answer to a problem that has been growing for them. The fact is, private carriers are not built to handle small or light packages. Their network and pricing structure is better suited to large packages, or a large number of packages going to one location. This pricing structure worked fine for years, but with the rise of e-commerce shipping, more individual items started to be sent directly to people’s homes. The first step for UPS and FedEx to counter the rising cost of small residential shipments was to add in the residential surcharge, but that maneuver still wasn’t enough to recoup lost revenue, so they started adding a surcharge specifically to small packages.

UPS and FedEx, like in so many other things, have the same rules for their dimensional packages, and, thankfully, the rules are relatively simple. A shipper needs to compare the actual weight of his or her package to what is known as the dimensional weight, and whichever is higher, that is the weight the shipper is charged. The formula for determining dimensional weight is:

Length" x Width" x Height" |

166 lbs. |

Most boxes produced will have all three dimensions printed on the bottom, so often there’s no need to measure. Simply take those numbers and determine the dimensional weight. This equation brings up one of the most deceiving parts of dimensional weight. It seems like there shouldn’t be many situations when that math would really affect your shipping, but it happens on a surprising number of shipments. Here’s an illustrative example:

Let’s take this simple handbag. A bag like this weighs 2 pounds and retails for $30-$40 online. Shipping this handbag using UPS or FedEx Ground Service (4-6 days) will cost anywhere from $8.50-$11.50. Its dimensions are 15” x 13” x 7.5”, so the math is pretty easy to figure out.

15" x 13" x 7.5" |
= 8.81 |

166 lbs. |

All carriers round up when it comes to real weight or dimensional weight, so that 2-pound purse becomes a 9-pound purse. Shipping costs jump from $8.50-$11.50 to $11.50-$20.70. If customers pay for shipping directly, and they realize that that their cheapest option could be as much as 2/3 the cost of the actual product, this increases the likelihood of more customers abandoning their carts. If the shipper is paying for shipping, an average increase of $5.64 per package adds up quickly.

Analyzing an example like the handbag scenario can be surprising, but what’s more amazing is how many products end up receiving this surcharge. It becomes essential for shippers to know the dimensions of every box they send and to make sure they track which ones are getting surcharged in order to make smart decisions about shipping in the future.

**USPS Dimensional Surcharges**

Postal Service Dimensional surcharges came about for a different reason, and so the rules are vastly different. The USPS network is actually ideal for smaller and lighter packages, so it has no reason to create rules that de-incentivize sending packages fitting that profile. USPS’ dimensional rules are actually contingent upon what equipment and personnel different facilities can handle at any given time. Some equipment, in some postal facilities, just can’t accommodate really large or really long boxes, so those parcels get a surcharge if they end up traveling over a certain distance.

The rules for the USPS are not only different, they are also more complicated. In fact, there are two different rules for packages going either long distance or short distance. For long distance (Shipping Zones 5-9), the rule is similar to UPS and FedEx (*i.e.* take the larger between actual weight and dimensional weight), but the calculation of dimensional weight is different and only applies to certain packages:

Length" x Width" x Height" |

194 lbs. |

The larger divisor (bottom number in case you aren’t up-to-date on your high school math) means that the dimensional weight will be smaller than with UPS and FedEx, which results in fewer packages getting penalized with dimensional weight surcharges. Also, packages whose L x W x H is greater than 1728” can receive the dimensional surcharge, which limits the number of packages that apply even further. For example, the handbag in the UPS/FedEx example does not get charged a dimensional weight by the USPS because 13”x 15” x 7.5” = 1462.5”.

For shorter distance shipments (zones 1-4), the rule is a bit more complicated. To receive the dimensional surcharge, the package needs to be less than 20 pounds and meet the criteria of the following formula:

*(Longest Side”) + [(2 x Width”) + (2 x Height”)] = between 84” and 108”*

If your package meets the above conditions, then no matter the weight, the package will be charged at the $20 weight. That seems like a harsh penalty, but in truth, this is a rare occurrence. You’d have to ship a ladder or two pillows packed lengthwise to incur that surcharge.

USPS rules are definitely different than the UPS/FedEx rules. Due to the unique nature of their rules, they apply to very few packages.

**USPS Dimensional Discounts**

While people have been talking a lot about dimensional surcharges, an often forgotten rule that can actually benefit a shipper is the USPS Dimensional Discount, commonly referred to as USPS Cubic Pricing. As mentioned before, the USPS network is ideal for small, light packages, and while private carriers use surcharges to discourage behavior, the USPS has tried to encourage large shippers to use them by offering discounts on packages that work best in the USPS network.

Dimensional Discounts with the USPS apply to packages that are lighter than 20 pounds and less than 50 percent of a cubic foot. To determine if one of your boxes applies, use the following formula:

*(Length” x Width” x Height”) < 864*

Further discounts apply if a package is 40 percent, 30 percent, 20 percent or 10 percent of a cubic foot. An example will be useful to help understand how drastic these discounts can be.

An alternator for a car can be expensive to ship. Alternators can weigh between 12-15 pounds. Fortunately, they are small objects, usually around 7” x 7” x 7”. If an alternator is shipped via USPS, and it was charged based off the actual weight, the price can be anywhere from $9.50-$43.50. When applying the formula for dimensional discount, an alternator is 20 percent of one cubic foot, which means the pricing range is only $5.75-$7.10. On average, you can save $16.85 per package by shipping an alternator using USPS Dimensional Discounts. That bears repeating. **On average, you can save $16.85 per package by shipping an alternator using USPS Dimensional Discounts. **You can see how important getting these types of packages are for the USPS.

**Conclusion**

With the rise of e-commerce shopping, the number of parcels moving around the country will only get bigger. As more packages are being shipped, the rules will only get more complicated, but the importance of knowing the dimensions of your package can not be overstated. Your dimensions should be captured and looked over to help determine what you can do to save money on shipping. It’s the main reason a company like Parcel Partners exists. We can help a company look at their shipments and find ways to avoid expensive surcharges and ship smarter.