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Dim weight changes mean more rate pain ahead

Sep 25, 2016 at 05:46 PM CST

The latest chapter in the multiyear rate squeeze applied to parcel shippers by FedEx Corp. and UPS Inc. was written last week when FedEx changed the formula used to calculate prices for all its U.S. air and ground deliveries. The narrative, though, will remain the same as in the prior chapters: Large shippers will mostly skate by, while smaller shippers will pay more.

Memphis-based FedEx announced Tuesday that it would shrink the "volumetric divisor" used to calculate dimensions of the domestic parcels it transports. To arrive at a rate based on a parcel's dimensions, FedEx multiplies the length, width, and height by inches, and then divides the sum by a divisor. Effective Jan. 2, the divisor will reset to 139 from the current level of 166 that's been in effect since 2011.