With recent announcements from some carriers about pricing changes going into effect in January of 2015, dimensional weights have jumped into the limelight for cost-conscious shippers in many industries. If you're not familiar with dimensional weights, they are a pricing mechanism used by many carriers to reflect the packaging "density" as a way to more accurately reflect the space and thus "carrier resources" taken up by a container.
It makes sense for carriers to do this since a box full of feathers may put less strain on the shocks in that delivery truck but it takes up the same amount of physical space as a box full of lead (or so goes the argument). Regardless of whether you see dimensional weights as fair and appropriate, they are definitely a pricing component that shippers should be aware of to manage accurate pricing and avoid losing money on surprise costs.
For example, I can configure Pacejet with a single-box shipment and then vary the weight on the shipment to directly see the impact of dimensional weight calculations in different shipment pricing scenarios.
Start by adding a package with dimensions 12x12x12 inches and a weight of 2 lbs:
Next, run a freight quote to view results for this package:
I can then increase the weight on the package from 2 lb to 11 lb with the same box dimensions:
Re-running a freight quote with the new weight shows some interesting results:
Notice how the Cost value for "FedEx 2Day" remained the same even though we added 10 lbs of additional weight into the box. That's dimensional weights in action. We were already being "effectively charged" for the larger weight in the original quote because of the dimensions of the package.
If we add just a few lbs more of additional weight, we'll find the threshold where actual weight is more than the dimensional factor, and the price starts moving back up again.
Most carriers provide documentation and tools to make understanding and applying dim weights easier, such as this FedEx calculator (http://www.fedex.com/ae/tools/dimweight.html) or this rules information for UPS (http://www.ups.com/content/us/en/resources/ship/packaging/dim_weight.html?WT.mc_id=VAN701060).
What To Do First, Second, Third ?
With new rules coming, where do you start to make sure your business is ready and you don't hit unexpected costs or charge-backs after those January shipping bills? The easiest place to start is to look at your contracts to determine if you're subject to the new dim weight rule changes. If you're not, then perhaps you have more time to adjust to the new rules if and when they make it into your operations.
If you are subject to new dim weight rules, then start looking more closely at how you capture actual packaging and weight information in shipping. The first step in avoiding unpleasant surprises is to make sure your process is managing accurate data so the prices you see will be clear and accurate, even if they move up as the new rules come online --- so at least you'll know what you're dealing with in the changes.
Another way to get ready would be to simply run some historical reports of shipments with actual and package dimensions and look for areas you'll be impacted. You can even export these shipments to Excel, add in the dim weight calculations, and look for historical information on how the changes "would have" impacted you if they had gone into effect earlier this year.
Need help? Give us a call and we can discuss your particular situation. If you're a Pacejet user, give our helpdesk team a call and discuss what you're looking for and we can get someone to assist with data, reports, or other types of discussions to help you get where you want to be.