In the past, packages were only billed by weight, regardless of the size or shape of the package. Carriers quickly realized they were not making a profit when shipping parcels that were lightweight. A lightweight yoga mat in a package was so cheap to send that, for UPS or FedEx, it wasn’t worth the amount of room it would take up in the delivery vehicle. In that time, carriers could fit a higher quantity of small packages that weighed the same weight as a yoga mat in their delivery vehicles and make more money.
It’s like going to a local cafe, ordering a coffee, selecting a four-person table and staying for five hours. Sure, you purchased a coffee, but that space could be given to higher-paying customers. The business loses money on the space that could have been used by someone paying more or by more customers rotating through the table within the five-hour window one person used to sip their coffee. What if instead of paying for the coffee, the patron paid for the amount of space he took up? In essence, the dimensional (DIM) formula was introduced to establish a minimum charge for the cubic space a package occupies.
How is DIM weight calculated?
Dimensional weight pricing is based on volume versus actual weight of shipments. It’s calculated by determining the cubic size of a package which means multiplying its length by width by height, dividing by the parcel company’s dim factor and then rounding up. The equation looks like this:
(L x H x W) / DIM
Ex. (7 x 9 x 12) / 139
Basically, the lower the divisor the more the customer will be charged. Both FedEx and UPS charge whichever calculation is higher, either the actual weight or the dimensional weight.
What does UPS and FedEx dim divisor mean for me?
Both FedEx and UPS have dropped their dim divisor to 139 for Ground packages. This puts domestic shipments in the same formula as international shipments. UPS recently announced its rate changes for 2018 with some of the changes going into effect on December 24, 2017. One of the changes that will majorly impact shippers is the dim divisor dropping from 166 to 139 for packages less than or equal to 1,728 cubic inches, or one cubic foot, for all U.S domestic services.
FedEx SmartPost, normally the cost-effective shipping option for residential deliveries, will apply dimensional weight pricing with a dimensional weight divisor of 139 to all shipments except FedEx SmartPost rates by ounce starting January 22, 2018.
Let’s look at an example that compares the 2017 non-dimensionalized rate to the 2018 dimensionalized rate for a FedEx SmartPost Zone four shipment. In 2017, a package weighing six pounds with a size of 1260 cubic inches (7 x 9 x 12) would cost a shipper $10.82. Now, with the dimensional weight divisor of 139 factored in that same shipment will be billed for dimensional weight rate of a ten pounds and charged $16.52. This change will certainly increase the price hike felt by customers with less dense, large packages.
Learn more: Is FedEx SmartPost the right option for me?
You can clearly see how the dimensional weight divisor drives the price of a shipment up. Dimensional weight is here to stay, and the all-important dimensional divisor continues to drop. A few years ago the dimensional divisor for most major carriers was 194. Now, at 139 the carriers continue to push for their profit.
How to counteract the impact of DIM weight
Carriers are fixated on making a profit. If you’ve experienced the backlash of dimensional weight charges, there’s a few step you can take. The most immediate way to offset the impact of dimensional weight is to trim your packages in whatever way possible to increase efficiency and reduce wasted space. One way to eliminate every inch of unused space is by increasing the amount of products per box shipped.
If you have a contract with a carrier, you don’t have to wait to take action. With Share a Refund, you can save 10-20% on shipping, bringing profits back to your business. Share a Refund contract optimizing experts can work to get you the best possible rates possible. Share a Refund’s industry knowledge can be leveraged to ensure shipping insights are properly used to negotiate the best contract.