As many companies have focused on maximizing their space, shipping companies such as FedEx Ground and UPS are trying to do the same thing as it relates to the space available on their trucks.
Have you ever received a shipment you ordered from your favorite on-line retailer in a large box and wondered why the shipping was so inexpensive? This was because the shipment was priced based on the weight and not the dimensions of the parcel. With the unprecedented increase in e-commerce over the last several years’ retailers have exponentially increased the number of single line item packages they are shipping. This increase has caused trucks to cube out of space before they weigh out and given the previous pricing model was based purely on weight, shippers are not able to maximize the space on their vehicles.
For example, a large box will take up more space in the shipper’s truck and theoretically should be cost more. Ground shippers have come to realize that this pricing model should be adjusted and they have implemented Dimensional Weight measurements to arrive at a more cost reflective billing rate.
Dimensional Weight or Dim-Weight is the newly adopted process by which UPS and FedEx Ground have begun to charge customers for parcels that are shipped with ground vehicles. Air shipments have been billed this way since 2011.
Previously, charges were determined per weight of the package rounded to the nearest pound, or if the volume of the package measured over 5,184 cubic inches or 3 cubic feet, the package was charged using the Dim-weight of Length x Weight x Height /194.
The new Dim-Weight standard measurements are rounded to the nearest whole number in inches. The volume is calculated as Length x Weight X Height, which gives you the cubic volume in inches for the parcel. Once the cubic volume in inches is determined, that figure is divided by 166 to determine the Dimensional weight in pounds and any fractions are rounded to the next whole pound. The charges are determined by whichever figure is higher, the actual weight or the dimensional weight.
What does this mean and how does it affect you as a retailer? It likely means an increase in overall shipping costs. Reports have suggested that as much as one third of all domestic ground shipments being handled today will cost more by the change.
What can you do to minimize these costs?
- Right-Size your boxes: Today, there are a number of automated solutions to help you right-size boxes. By matching the shipping container size to each order, you minimize the use of packaging fill and avoid excess dimensional weight shipping charges. However, if you are shipping in a less automated environment, “right sizing” your shipping containers will also work to reduce the Dim-Weight.
- Consider multiple shipping providers: Different shipping providers have different rates, so look into which is the most cost-effective for your business. For example, USPS uses a dimensional weight volume divisor of 194 so the weight you are charged will be less than Fed-Ex Ground or UPS. Evaluating which carrier and methods are best for your business is a quick and easy way to ensure you’re getting the best deal.
Dimensional Weight Standards have made packaging more important than ever. It’s no longer acceptable to send your products in any box available. Instead, retailers need to place more focus on this sometimes ignored aspect of the shipping process because size now matters.