As I predicted in my last Blog, UPS today has announced they are following FedEx Ground/Home Delivery and will start charging weight based on the larger of actual or dimensional weight. According to UPS, this change will affect the cost of about 2/3 of their packages. This will substantially improve margins for both UPS and FedEx and send shippers scrambling to reduce package sizes and/or find other shipping options.
My sources inside USPS say that they have no plans to change their size and weight factors. If so, that will give shippers the opportunity to switch to Priority Mail, Standard Mail, and Parcel Select and save money. USPS will have the opportunity to pick up a lot of new business from the other carriers and improve their bottom line. Hopefully they will take advantage and improve their financial situation.
UPS and FedEx will probably exempt their larger customers for a short transition period. The hardest hit will be small shippers who could see their costs rise by 25-50%, depending on what they currently ship. The world for them will be very different.
I’m putting together the numbers for switching to USPS from UPS and FedEx in 2015. I’ll be back soon to share some opportunities.