By Michael Calia
United Parcel Service Inc. on Tuesday said it would start
factoring box sizes into the price of ground shipments in the U.S.
and standard delivery to Canada.
The move follows rival FedEx Corp.'s decision in May to start
pricing packages according to their sizes instead of by weight
alone.
The pricing changes come as consumers increasingly rely on
e-commerce and delivery with free-shipping options for lightweight
goods in large packaging--such as paper towels and shoes--that had
traditionally been bought at brick-and-mortar stores.
UPS on Tuesday said it thinks the new pricing--which will use
so-called dimensional weight--will encourage shippers to pack
lighter items in smaller boxes. Packages have become less dense in
recent years, with the ratio of weight to external packaging
declining, the company said.
UPS said it believes its new pricing structure will translate
into lower vehicle and fuel costs as the smaller package sizes will
mean more efficient use of space on delivery vehicles.
"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," UPS Commercial
Chief Alan Gershenhorn said in a news release.
UPS will start the new pricing Dec. 29, following the crucial
holiday-shopping and shipping season. FedEx said it plans to apply
its new pricing model to all ground shipments starting in
January.
Several e-commerce leaders such as Amazon.com Inc., meanwhile,
are looking to combat rising shipping costs by testing in-house
delivery networks in a bid to gain more control over how quickly
and efficiently customers get their orders. Observers have warned
that a fully operational delivery and logistics system from Amazon
is likely years off.
Write to Michael Calia at michael.calia@wsj.com
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