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32 DC VELOCITY OCTOBER 2014 www.dcvelocity.com
tend to tilt toward B2C transactions. By contrast, USPS’s new rates
are much higher starting at shipments weighing seven pounds and
that move over longer distances, the
Shipware data show.
Unlike UPS and FedEx Corp.,
the post office’s other main rival,
USPS doesn’t assess fuel surcharg-
es or impose mandatory residential
ground delivery surcharges. As a
result, the price gap is more pro-
nounced when these so-called acces-
sorial fees are factored in, according
to Shipware. For example, when fuel
and residential delivery surcharg-
es are included, the list rates charged
by UPS and FedEx Ground, FedEx’s
ground delivery unit, are between 35. 4
and 135.8 percent higher than the new
USPS Commercial Plus rate for a package
weighing 30 pounds or less and shipped
up to 600 miles, the Shipware data show.
USPS did not make an executive available for an interview. In an e-mail, Katina
Fields, a USPS spokeswoman, said the
agency hopes to attract more business by
cutting shipping prices.
NO NEW DIM WEIGHT CHARGES
At the same time it announced it was
rolling back rates, USPS said it would not
implement any new dimensional weight
pricing on its parcel shipments. By contrast, UPS and FedEx will soon begin
assessing so-called dim weight charges on
ground parcels measuring less than three
cubic feet. Effective Jan. 5 for FedEx and
Dec. 29 for UPS, rates on those packages
will be based on their dimensions rather
than weight. The result will be a significant increase in shipping costs for producers and merchants who tender lightweight but bulky parcels that occupy a
disproportionate amount of space aboard
a delivery vehicle. Most of the affected
shipments are B2C products increasingly
being ordered online.
USPS takes a bifurcated approach to
Priority Mail pricing. A parcel weighing
less than 20 pounds, measuring between
84 and 108 inches in combined length
and girth, and moving under 600 miles
is charged a “balloon” rate equal to the
price of a 20-pound parcel. However, few
Priority Mail pieces fit those dimensions.
For packages moving more than 600
miles, a piece that exceeds one cubic foot
is subject to dimensional pricing. USPS
uses a volumetric divisor of 194 to calculate dimensional weight, a more favorable
formula for shippers than the divisor of
166 used by FedEx and UPS; as an example, a one-cubic-foot parcel measuring
1,728 cubic inches, when divided by 194,
would yield a lower shipping charge than
if divided by 166.
A source close to USPS said the agency
had been aware for some time that FedEx
and UPS planned to change their pricing
schemes. In addition, the cuts in Priority
