Friday, November 21, 2014

Dimensional Weight Pricing: What is it, and how will it Affect You?

If you’ve recently heard about dimensional weight pricing, and are wondering what it is, you’re not alone. It’s a new shipping pricing method that’s going into effect in 2015, and it’s important to be aware of what it means, and more importantly, how it will affect your business.

All of the major carriers, including UPS, FedEx, and DHL will be using the dim weight method, which applies to all packages shipped by ground service that are less than three cubic feet—therefore, the pricing is based on volume rather than the actual weight of the shipments. Carriers will multiply the length by width by height and divide that by 166 for domestic packages or 139 for shipments to Canada; the resulting cubic size determines the price.

So why the changes? As most people are aware, e-Commerce has changed the way people buy, sell, and ship. Currently, a growing number of e-Commerce shipments are not being packed with regard to the density of packing, making shipping containers relatively large yet lightweight (relative to what’s inside the container). What this leads to is full delivery vehicles that aren’t being used to their maximum capacity, which is inefficient. The dim weight method optimizes packaging while taking size, rather than weight, into account.

There are several advantages that will come from these changes, not the least of which is the reduction of fuel and transportation costs. The aim is also to minimize the environmental impact of packaging—a result of greater efficiency. A hope of the new method, of course, is that the savings will be passed along to customers.

However, in order to reap the benefits, retailers and manufacturers must be careful to optimize their shipments. Otherwise, millions of dollars could be thrown away. So how can you be sure to benefit from dim weight pricing, rather than lose money because of it? Familiarize your entire staff with the process, and follow these tips:

  •        Choose the appropriate packaging size for a product—size matters! Use only what you need; no more, and no bigger
  •     Use high-quality shipping materials, taking strength, cushioning, and durability into account
  •         Be sure to block and/or brace items to keep them safe
  •        Talk to your carrier representative and be fully aware of your particular dim weight pricing
  •        Measure the OUTSIDE length, width, and height of containers after packaging
  •        Keep track of all monthly shipping charges and make sure you’re being charged correctly
  •        Keep your customers educated on the policy in order to maintain compliance for return shipments

If you and all of your employees are diligent about the dim weight pricing, there’s no reason you can’t enjoy the advantages that will come from it. And don’t forget—we’re happy to answer any questions along the way!

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