Dive Brief:

• New dimensional weight pricing went into effect Sunday for United States Postal Service (USPS) customers, potentially increasing prices for parcels larger in volume and lower in weight for priority mail and express packages. The change is part of a group of rate changes, most of which went into effect Jan. 27. 
• Dimensional weight is calculated by multiplying a parcel's width by height by length and then dividing the product by a divisor set by the carrier. On Sunday, USPS's divisor dropped from 194 to 166. 
• Packages exceeding 1 cubic foot in volume are no longer exempt from dimensional weight charges in any zone. Prior to the change, packages in zones 1-4 were exempt. Shippers must pay the rate for the larger number, whether that's actual weight or dimensional weight. 

Dive Insight:

This move will incentivize shippers to use the smallest box possible for their parcels and bring USPS closer in price to its competitors, though still lower. 

FedEx uses a dimensional weight divisor of 139 and UPS uses 139 for individual customers and 166 for retailers. Neither private carrier exempts packages under 1 cubic foot. 

A smaller dimensional weight divisor will impact large, light packages the most since these parcels have a much higher dimensional weight than actual weight. A calculation from iDrive Logistics estimates the change could trigger a 10% to 90% bump in shipping cost for large, light items, or shippers with inefficient shipping practices when it comes to parcel size. 

Parcel volume continues to increase for USPS, but the carrier still struggles to turn that volume into meaningful profitability growth. Last month, USPS Chief Financial Officer and Executive Vice President Joseph Corbett said in a statement USPS is looking at ways to increase its revenue and decrease its expenses. This pricing change means the carrier will bring in more revenue for not just the weight, but the volume of parcels on each truck.