Unless you’re an eCommerce merchant who’s been hiding under a rock for a few years or dealing solely in intangible products, you’ve probably heard a thing or two about Dim Weight. The Dimensional Weight Pricing model (also known as DIM) was introduced in 2015. The purpose of Dim Weight is to ensure that shipments are billed properly when they utilize a larger amount of space in carrier transport vehicles, like planes and trucks.
A package’s dim weight is calculated by first identifying the package’s cubic volume (length x width x height) and then dividing the result by the chosen carrier’s dimensional factor. Finally, the DIM is compared to the actual weight, and the carrier bills the greater of the two. The update has been shown affect about 60-70% of packages shipped.
In 2017, both UPS and FedEx introduced changes to their DIM formulas. FedEx formerly used a dimensional factor of 166 for domestic, and 139 for international shipments. At the beginning of the year FedEx lowered their dimensional factor to 139 for all shipments. UPS opted to maintain their Dim Weight calculation of 166 for domestic packages that are less than 1,728 cubic inches. However, UPS chose to match FedEx’s 139 for any domestic packages over one cubic foot and all international shipments. The smaller denominator essentially means that these two carriers will have heavier DIM weights for more packages, which will equate to higher billable shipping weights.
Despite the concurrent increases from FedEx and UPS, the USPS opted to only use DIM weight pricing in very specific circumstances. First, the USPS opted to only apply Dim Weight pricing to Priority Mail® parcels larger than a cubic foot and going to zones 5-9. In addition, the USPS is utilizing an advantageously higher number of 194 as their dim divisor. When compared to 166 used by both FedEx and UPS, it’s easy to see that there are several larger packages that will still ship for less by using USPS Priority Mail®. But even with the limited increases, some shipments will still feel the pinch of higher rates.
But before you decide to ship all your domestic packages with USPS, you still must take USPS Balloon Pricing under consideration. For Priority Mail packages weighing less than 20 pounds, addressed to zones 1-4 and measuring between 84″ and 108″ in combined length plus girth (distance around the thickest part) will be billed at the 20-pound Priority Mail zoned price regardless of weight.
So, now that you know the carriers are doing their best to make sure you pay the highest shipping costs, what can you do to keep your costs down?
Make Sure You’re Not Paying More… to Ship Air
While it’s important to utilize packaging that allows you to ship your orders without an increased risk of damage, even a small amount of extra space in your boxes can result in sticker shock when you open your shipping bill. A general rule of thumb is to utilize a box big enough to fit your items, then add packing material to prevent movement and protect items that are easily damaged.
If you are losing money to the DIM you should carefully review the types and sizes of shipping materials you use to send your orders. Make sure your fulfillment utilizes the smallest container that can accommodate your items and still protect the contents. And while you’re at it – review your packing materials as well. Inflatable air packing materials are lightweight and can be customized to fit just about any sized box. Make sure that your fill material is lightweight and best suited to protecting the types of products you are shipping, and use polybags whenever possible.
In the end, the best advice we can offer is that in the hunt for the most cost-effective shipping options… size matters, and so does weight. Some merchants may find that they are unable to find packaging options that reduce their Dim Weight costs. If this is the case, you still have a few options. You can increase your product costs to compensate for the higher shipping rates, or you pass the higher rates on to your customers with an explanation of the associated costs. The good news is your competitors will likely need to make a similar choice, or eat lower profits.
A qualified third party logistics (3PL) provider will take a proactive role in analyzing your product mix, common shipping destinations, carriers and shipping methodologies to come up with a comprehensive plan that includes the most cost effective packaging options.
Rakuten Super Logistics’ team of expert eCommerce fulfillment advisers can get you started in evaluating your current operations and implement a solution that’s right for your business. Contact our team today to learn what smart fulfillment can do for your growing business.