If you’ve studied your shipping carrier’s rate sheet lately, or reviewed one of their invoices, you’ve likely noticed the term “dimensional weight pricing.”
If you haven’t yet seen that term, then you’ve probably noticed that your projections for your shipping costs have been getting less and less accurate over the last five years.
Dimensional weight, also known as dim weight or volumetric weight, is a way for third-party shipping carriers to measure package size. Rather than simply setting a parcel on a scale to see how much it weighs, carriers plug the length, width and height of a package into a formula to determine the parcel’s dim weight.
Most carriers that use dimensional weight pricing then compare the package’s dimensional weight to its actual weight. Whichever is larger, that number determines the cost of shipping the package.
Dim weight pricing has long been the norm in air freight. About five years ago, FedEx, UPS and other major shipping carriers started using it to price ground shipments as well.
If you don’t know how to calculate dimensional weight yet, make 2019 the year you begin doing so — because the dim weight pricing structure seems to be here to stay.
How to Calculate Dimensional Weight
Dimensional weight is based on the cubic size of a package. First, carriers multiply a package’s length, width, and height. The result is then divided by a predetermined dimensional divisor. The result of that equation is a parcel’s dim weight.
For example, let’s calculate the dim weight of a pair of hiking boots. The shoebox’s length width and height measures approximately 12 inches by 10 inches by 5 inches. And we’re shipping them using FedEx Ground, which uses a dimensional weight divisor of 139.
12 x 10 x 5 = 600 cubic inches. 600 cubic inches / 139 (the dimensional divisor) = 4.31.
The dimensional weight of our hiking boots is 4.31 pounds, given their cubic size.
Next, we need to find out if our shipping carrier will calculate the price of shipping this parcel according to its dimensional weight or its actual weight. That will give us our final shipping costs for this item.
Dimensional Weight vs Actual Weight
In almost all cases, carriers compare a parcel’s dimensional weight to its actual weight and choose whichever is bigger. In this case, if the shoes weigh six pounds, we will be charged for a six-pound shipment. But if they only weigh two pounds, we will be charged for a five-pound shipment. (Carriers generally round up to the nearest whole number).
Note that dimensional divisors can vary, especially for international shipments. They also change every few years when carriers announce their shipping rates increase. It’s essential that supply chain leaders monitor these announcements and adjust their budgets accordingly — even a small tweak in the dimensional divisor can have a big impact on a company’s shipping spend, whether they’re domestic shipments or international. Knowing how to calculate dimensional weight will allow you to adjust to even these minor rate changes.
What is Dimensional Weight Pricing?
For shipping companies, it’s simple: DIM weight pricing is a way to make more money from shippers. Parcels with the same dimensions take up the same amount of space in a truck bed, no matter what they weigh. It costs carriers only slightly more to ship heavy goods compared to light ones. So when ground shippers charged according to weight, shippers moving lightweight goods got great deals.
At least, they got great deals until carriers realized they could increase their profit margins by charging according to dimensions rather than weight.
DIM weight pricing encourages shippers to pack more efficiently. When products are packed densely, carriers can fit more of them on truck beds, which means they spend less moving each parcel and increases their profit margins. While it takes slightly more fuel to move heavier loads, it takes quite a bit more fuel to move an additional truckload of light but air-filled boxes. In this way, DIM weight pricing may actually help make the shipping industry more fuel-efficient.
What Dimensional Weight Pricing Means for Your Business
Understanding how to calculate dimensional weight pricing can actually benefit your bottom line. It encourages shippers to right-size their packaging, rather than filling unnecessarily large boxes with wasteful packing peanuts or unnecessary air bags. That will save you money on packaging in the long run.
If you ship with FedEx, UPS or another carrier that has storefront locations, visit one. Ask a team member to help you select right-size packaging for your item. They can also help you determine how much cushioning delicate items really need to optimize their dim weight.
Also, make this an opportunity to explore packaging options other than traditional cardboard boxes, like padded or poly mailers. For the right products, these shipping materials offer innovative, long-term solutions.
Dimensional weight pricing became industry standard five years ago. Every few years, shipping carriers reduce the value of the dimensional divisor for various domestic and international shipping services. The dim weight pricing isn’t going anywhere — if anything, it’s only going to apply to more parcels in the future.
So be proactive. Use DIM weight pricing as a reason to explore new packaging solutions, which could include everything from custom designed packaging to the U.S. Postal Service’s Priority Mail options (which do not charge according to dimensional weight). You may choose to focus on sustainable materials or creating a memorable customer experience.
As always, if you need advice, remember that Reveel’s expert consultants are here to help. Reach out today to start a conversation.
The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.
