Why Carriers Apply Dimensional Weight Pricing

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Have you realized that shipping costs have increased 20 to 30 percent? That’s because as of January 2015, carriers like FedEx and UPS Ground began using the dimensional weight pricing method, which affects over 70% of all shipments.

Delivery companies have switched to using this method in response to the capacity crunch, consumer buying behavior and packaging (in)efficiency. With the transportation industry evolving, carriers had to begin using a pricing method that identified space as opposed to weight. Since online shopping is wildly popular across all retail sectors, capacity on carriers is limited. Consumers expect to have products, big and small, delivered to their doorstep in a timely fashion. The range of products that a person can buy online is enormous; from shoes to pet supplies, cosmetics to TVs, even books and food. Then, consider these products, bubble wrapped and packaged into a (ill-fitting) box that take up valuable room on the carrier.

Carriers who had been only charging shippers based on the weight of the product lost space and money. Think of it like this: if a consumer buys a pack of gum online, and the warehouse chooses to package that pack of gum in a box significantly bigger, then the carrier is wasting space on their truck that could have been used for more products. With dimensional weight shipping, the box size takes into account the limited capacity so that shippers are essentially penalized for not packaging products resourcefully.

A UPS e-commerce study revealed that more than half of online shoppers have abandoned an online shopping cart due to the estimated delivery date and 61% cited shipping costs as the top reason for cart abandonment. To fix this problem, shippers have to choose the packaging that relates closely with the product inside. Determining which box to use isn’t always an easy choice, but now it weighs heavily on warehouse employees because the cost associated with wasted space significantly affects the delivery price.

In order to find the dimensional weight, multiply the length, width and height of a package and divide it by 166. Then, round this number up. That total equals dimensional weight. The shipment price is determined by which ever weight, actual or dimensional, is greater. Therefore, dimensional weight takes into account the actual size of the package versus the actual weight of the package.

Identifying the right products for the right box at the right price and working with a partner who understands how to optimize your supply chain given the current conditions can help you avoid excessive costs related to dimensional weight prices.

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