The secret is out. FedEx and UPS are making a paradigm shift in the way they price small parcels, and it will have a significant impact on all companies that rely on them for their services. However, this change in how these companies are calculating freight pricing is not an entirely new practice. Today, all large package shipments above 3 cubic feet are subject to this more rigid pricing structure that integrates both parcel weight and dimension to calculate shipping price.
FedEx and UPS are now expanding this pricing methodology to the smaller parcel market. The reasoning behind it is quite simple. They are feeling pressure to find ways to increase revenues and streamline costs to drive profitability. Both FedEx and UPS built their small parcel business on the weight of a package and until now, it didn’t matter how big a box was as long as its volume was less than 3 cubic feet. As a result, companies have been able to choose a shipping box without much thought, as cost wasn’t a factor. The result, however, is wasted space in every UPS and FedEx plant, plane and delivery truck. It makes perfect sense. Both companies are looking to lean out their process, drive costs lower and increase revenue–and this is a very straightforward way of doing so.
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