Atlanta—Following its rival FedEx, logistics giant UPS announced today that it will fully implement dimensional pricing for all UPS Ground and UPS Standard Canada shipments starting December 29. This means shipping costs will now be calculated based on a package’s size, not just its weight.
UPS has already been using dimensional pricing for its domestic and international air services, as well as UPS Standard Mexico shipments and UPS Ground packages exceeding three cubic feet. The new policy extends this pricing model to all UPS Ground and UPS Standard Canada shipments.
The Rationale Behind Dimensional Pricing
Alan Gershenhorn, UPS Executive Vice President and Chief Commercial Officer, stated: "For years, UPS has explored expanding dimensional pricing because it allows us to better align shipping rates with costs, which are influenced by both package size and weight."
FedEx took a similar step earlier this year, announcing in May that it would apply dimensional pricing to all FedEx Ground and FedEx Freight shipments starting January 1, 2015. The company defined dimensional weight as "a common industry practice that sets transportation prices based on the relationship between a package’s volume (the space it occupies) and its actual weight."
A Shift Years in the Making
Back in late 2010, both FedEx and UPS adjusted their dimensional weight divisors—a key factor in calculating shipping costs based on size—when announcing their 2011 rate changes. The divisor, used to determine how much space a shipment occupies, was changed from 194 to 166 for domestic services. At the time, logistics experts warned that this would significantly impact shippers by increasing carrier profits without requiring additional services or investments.
UPS explained that the move to dimensional pricing reflects recent e-commerce trends, where packages are becoming lighter relative to their size. This reduces cargo space efficiency and raises per-package costs. The company argues that dimensional pricing will encourage shippers to optimize packaging, reducing excess materials, fuel consumption, emissions, and overall shipping expenses.
The Financial Impact on Shippers and Consumers
Jerry Hempstead, President of Hempstead Consulting in Orlando, noted: "This is a massive pricing change. Carriers aren’t incurring extra costs or offering additional services—they’re just charging more for what they’ve always done. It’s purely a yield-boosting move."
While large shippers with negotiated discounts may see mitigated effects, smaller businesses and consumers will likely bear the brunt. For example, shipping a five-pound package of toilet paper within 250 miles could cost up to 42% more under the new rules.
The E-Commerce Factor
The shift to dimensional pricing is partly driven by the explosive growth of online shopping, which now accounts for about 9% of all retail sales and is growing at an estimated 15% annually. Last year’s holiday delivery chaos exposed FedEx and UPS’s capacity shortages, prompting carriers to rethink how they handle lightweight, bulky packages that occupy valuable truck space.
Satish Jindel, President of SJ Consulting, highlighted the issue: "A 30-pack of toilet paper weighs five pounds but occupies space equivalent to a 25-pound shipment. Free shipping promotions have led to irrational shipping practices."
What’s Next for Carriers and Shippers?
Rob Martinez, President of Shipware Systems Corp, estimates that UPS’s policy change could generate an additional $380 million in annual revenue due to its larger ground shipping volume compared to FedEx. However, full implementation may take years, with carriers gradually tightening dimensional weight exceptions.
As e-commerce continues to grow, both carriers and shippers will need to adapt—whether by optimizing packaging, adjusting pricing strategies, or exploring alternative delivery methods. For consumers, the era of oversized boxes filled with air may soon come to an end.