How Parcel Carriers Use Dim Weight Pricing to Increase Shipping Costs

As an eTailer, you’ve got a lot on your plate.  Too much, probably, to focus on the details of how parcel carriers are charging you for shipping.

But there’s a hidden profit killer that you absolutely need to understand – dimensional weight, or dim weight, pricing. A little focus here can save you tens of thousands in bottom-line dollars.

Shipping costs have historically been calculated based on actual package weight. But parcel carriers recognized that they were losing money on larger, lighter-weight packages that ate up truck space. Dim weight is the theoretical weight of a package – what carriers think the package should weigh, given its size, at minimum density.

Since 2015, FedEx and UPS have charged based on what is greater, the dim weight or the actual weight. So, using a simple formula – (Length x Width x Height) / (dimensional factor) – carriers establish that a package of a certain size should weigh 5 pounds. If it weighs 3 pounds, you still pay for a 5-pound shipment, but if it weighs 8 pounds, you pay for an 8-pound shipment.  That’s how dim weight pricing works.

To see if you are being charged by dim weight (you probably are), ask to see one of your freight bills.  If you see language like “We calculated charges based on a dim weight of…” you are likely paying more than you should.

How to Control Cost Increases Due to Dim Weight Pricing

There are four ways to tame the dim weight profit killer:

• Rightsize your shipping boxes. Let’s say your box is 10x10x10. On UPS, your dim weight would be 7 pounds and cost $9.24.  If you reduce the box size to 10x10x8, your dim weight would be 5 and cost $8.49.  If you ship 20,000 of these packages a year, that’s an annual savings of $15,000. 
• Provide the exact dimensions of your box to the carrier. If you let parcel carriers use their scanners to measure your boxes, they may get it wrong and/or round up the measurement to goose the price.
• Move from boxes to polybags. Polybagging machines reduce labor in the fulfillment warehouse and eliminate the dim weight pricing factor because polybags minimize package size.
• Explore the use of hybrid carriers. Using hybrid carriers (UPS SurePost, FedEx SmartPost, and DHL E-Commerce) that use the USPS to make the final mile delivery can soften the effects of dimensional weight.

Attention to these shipping details can save you 5% to 10% on your parcel shipping costs. Check your annual parcel bill to see what kind of profit impact that can have on your businesses.