A Comprehensive Guide to Dimensional Weight
and how to reduce its impact on your bottom line
What is dimensional weight?
Dimensional (DIM) weight, also known as volumetric weight, is a pricing technique that enables parcel carriers to account for not only the physical weight of a package but also the space that it occupies on their transportation vehicles. You are most likely to be impacted by dimensional weight if you ship light but bulky items, have large void fill requirements, or pack small items in boxes that are larger than necessary.
How is dimensional weight calculated?
To many it is a mystery how the carriers calculate the final billable weight, the following illustrates the steps carriers take to calculate freight rates based on packages' dimensions and weight:
Step 1. Weigh and dimension the parcel
When a parcel comes in to a carrier's sorting hub, carriers use expensive and automated parcel measurement systems to measure its size and weight. If the parcel is not a cuboid or a box, the dimensions are taken based on the smallest box that the parcel can fit in.
Step 2. Calculate dimensional weight
The dimensional weight of a particular parcel is calculated as:
The DIM Factor differs by carrier and service, for example UPS Ground uses a DIM Factor of 139 (in/lb) or 5000 (cm/kg) for retail customers, and 166 (in/lb) or 6000 (cm/kg) for commercial customers, while FedEx Ground uses DIM Factor of 139 across all its services.
Step 3. Calculate billable weight and freight rate
Billable Weight = Greater of DIM Weight and Actual Weight
The billable weight is the larger of DIM weight and actual weight of the parcel. The carrier calculates a freight rate based on the billable weight and destination.
Rate Charge = Based on Billable Weight and Final Destination
Step 4. Calculate final charge
And that's not all! To maintain profitability, carriers' apply surcharges such as fuel surcharge to account for increases in fuel price, delivery area surcharge for deliveries to remote locations, oversized surcharge for handling extra large parcels, etc.
Freight Charge = Rate Charge + Applicable Surcharges
For example, if we are shipping a 10" cube that weighs 5 lbs, from New York City to San Francisco by FedEx Ground, this is how freight charges are calculated:
How to minimize impact of dimensional weight?
As shown in the previous example, the billable weight of 8 lbs is 60% higher than the actual weight of 5 lbs. Depending on where and how the parcel is shipped, the final freight charge can be 30% more than what is estimated. If dimensional weight is hurting your bottom line, here's some tips to minimize its impact.
1. Negotiate DIM Factor
A higher DIM factor work in your favor to reduce the impact of dimensional weight. If you ship large number of parcels every month, sometimes you will be able to negotiate a different DIM factor with your carrier. Using the example above, the difference between a DIM factor of 139 and 166 is a whole pound, or roughly 20%!
2. Stock more standard box sizes
It is hard to pack efficiently if you only have 1 box size to choose from. Having too many standard sized boxes on the other hand makes it harder to choose the right sized box for the order, as well as requiring you to stock more packaging material. Many distributors find 10 - 20 different box sizes gives a good balance.
3. Cut the boxes
Cutting down a large box to reduce its dimensional weight can end up saving more in freight charges compared to the extra labor cost. In most cases, international, long-haul, or air (express) shipments is definitely worth the extra effort to cut down boxes, even if its just an inch or two. This website has a very good step by step guide for shortening the height of a box.
4. Use multi-depth boxes
If cutting down boxes is too time consuming, consider using multi-depth boxes. Even though they are more expensive than standard corrugated cardboard boxes, they can be easily shortened to reduce the height of the box, here are some examples.
5. Pack more efficiently
Packing more efficiently not only reduces freight charges, but also packaging costs and void fill requirements. It is not only good for your bottom line, but also great for the environment. To encourage better packing efficiency, introduce volume or density based performance metrics for your packers in addition to lines/orders fulfilled per hour.
6. Measure your boxes
You can get more accurate shipping charge estimates by measuring every box you ship out, allowing you to charge your customers the correct amount before it leaves your warehouse. It also gives you evidence for fighting the charge corrections in case the carrier made a mistake (and they do it a lot more often than you think!). It is time consuming to manually measure and entering in dimensions, just like a scale, parcel dimensioners quickly measures the dimensions of your package, and enters them into the computer for you. Traditionally parcel dimensioners are very expensive, but with technological improvements, parcel dimensioners have come down in price. One example is the Tricolops DIM 100, which cost slightly more than a high end scale.
Even though dimensional weight causes a lot of headaches for distributors, it is necessary in order to encourage businesses to ship more efficiently. We hope this articles clears out any confusion about how carriers calculate dimensional weight based freight charges, and feel free to send your experiences with dimensional weight to email@example.com and we will be able to help more people reduce the impact of dimensional weight.