Shift to dimensional pricing gains momentum

The move toward dimensional pricing continues. FedEx Corp. recently made headlines by announcing that starting Jan. 1, 2015, it would price ground parcel shipments measuring less than three cubic feet by size rather than weight. This will likely result in significant rate increases for lightweight, bulky shipments that take up a lot of space in the company's vans.

FedEx is far from the first to go the dimensional pricing route. Old Dominion Freight Line (ODFL) pioneered the practice in less-than-truckload (LTL) transportation a few years ago. More recently, UPS Freight, the LTL unit of UPS Inc., rolled out a density-based pricing program for interested shippers. Now, LTL carrier YRC Worldwide has similar plans. The company expects to install 38 automated "dimensioners" to measure and weigh items at some of its YRC Freight terminals by year's end. YRC also has a pilot program to install dimensioners at some locations operated by its YRC Regional unit, CFO Jamie Pierson said in a conference call to discuss the company's first-quarter results.

Pierson told analysts that the dimensioner technology helps the company more accurately measure the cubic volumes of a larger percentage of its shipments. "The capture of precise shipment dimensions improves our ability to determine the true cost of each shipment based on weight and space utilized," Pierson said during the call. And in words that won't be music to the ears of pillow, lampshade, and feather shippers—whose lightweight products have long been priced by weight rather than by cubic volume—Pierson added that the equipment "positions us to accommodate a shift in the market toward density-based pricing methodologies."