The first phase of USPS rate hike went into effect in January earlier this year.
Retailers doing order fulfillment must also provide dimensions when the package cubic volume measures over one cubic foot (1,728 inches) while generating labels. Shippers are also encouraged to provide dimensions for all packages and allow for configurable dim divisors to support future changes. Negotiated Service Agreements (NSAs) will be allowed to have a configurable dim divisor for each Zone at this present time.
If you are a USPS shipper, this will impact you. Let’s see this via the following example.
New Price (effective June 23)
15 x 12 x 10
10 Pounds (194 DIM) = $26.85*
11 Pounds (166 DIM) = $29.00*
$2.15 (8% INCREASE)
*Priority Mail Retail Rates to Zone 5
While the DIM change from 194 to 166 will certainly impact some postal shippers, it’s important to know that the Postal Service will continue to apply actual weight for packages that don’t exceed one cubic foot in volume. That is, if the cubic volume of a box doesn’t exceed 1728 inches, the charge will continue to be based on the actual weight (not DIM weight).
That’s not all. The Postal Service will also revise the weight limitation for First-Class Mail International (FCMI) flat pieces to 15.994 oz. to more closely align the definition of FCMI large envelopes (flats) with that of the Universal Postal Union Conventions.
For FCMI flats that are over 15.994 oz., USPS will not process those as FCMI starting June 23, instead, you will need to classify and mail those pieces under First-Class Package International Service (FCPIS).
You could alternatively elect to use another class of mail such as Priority Mail Express International or Priority Mail International, if the mail piece meets the requirements for those mail classes.
Below are few strategies for offsetting the impact of the new DIM billing:
1. Move package volume from USPS to FedEx/UPS or other parcel carriers. High-volume shippers can negotiate deeper discounts and more favorable DIM divisors. Many regional carriers offer shipper-friendly DIM divisors compared to the large national carriers. The large national carriers right now may be more open to offering special incentives to shippers as they try to offset the loss of business from Amazon.
2. Try to get commercial base pricing (CBP) or commercial plus pricing (CPP). Most Cahoot merchants qualify for special CBP and CPP pricing; please contact us if you are not enjoying these rates already. High-volume shippers can get even deeper discounts by pursuing a negotiated services agreement (NSA) with the Postal Service or through authorized postal resellers. These discounts could offset DIM increases, at least in the short-term.
3. Improve packaging. By reducing excess box dimensions and minimizing fill, shippers can reduce the impact of dimensional pricing, reduce corrugated and packing material costs, and reduce carbon emissions.
4. Optimize via Cahoot. By joining Cahoot’s innovative peer-to-peer ecommerce order fulfillment networkTM, you can convert say a zone 8 shipment to a zone 2 shipment. You save big which more than makes up for any DIM billing increase, plus the packages get delivered to your customers faster.
If you haven’t yet considered the impact of the upcoming June 23 changes, you could be looking at an 8 percent-plus increase on some or more of your USPS packages. Please contact a Cahoot Expert, if you need help or would like to learn more.