UPS to introduce dimensional pricing for US ground packages

UPS has announced plans to introduce dimensional pricing for packages sent via its US ground services, including e-commerce packages. The world’s largest parcel delivery firm said it would be pricing based on exterior package size from December 29, 2014, for all UPS Ground services.

It will also apply to all UPS Standard to Canada services.

The move is a way for the company to tackle the increasing number of lightweight packages being sent as the result of online shopping, which becomes increasingly less profitable to deliver if packages are priced by weight alone.

UPS said it was following industry trends by opting for dimensional pricing, but also suggested the move would encourage more of its clients to improve their packaging practices, reduce package sizes and reduce the excess use of packaging materials.

This would result in lower fuel use, vehicle emissions and transportation costs as package efficient improves, it said.

The Atlanta-based corporation already uses dimensional pricing for its air services, both domestic and international, and for its UPS Standard to Mexico service from the US, as well as UPS Standard to Canada services for packages above three cubic feet in size.

“Appropriate”

Alan Gershenhorn, the new UPS executive vice president and chief commercial officer, said: UPS has been researching the potential expansion of dimensional-weight pricing for a number of years because it enables us to more appropriately align rates with costs which are influenced by both the size and weight of packages.”

The popularity of online shopping in the United States has meant a greater proportion of lighter-weight parcels in the UPS mix over the past few years, which has hit the company’s revenue per piece performance.

Last year the company said higher demand for lightweight, low-yielding package services led to a 0.6% dip in its average revenue per package compared to 2012.