By now we are well aware of the monumental, high-impact changes both FedEx and UPS made to dimensional weight (DIM) pricing for all ground shipments back in January 2015. Dimensional weight works by calculating the cubic size of a package by multiplying its length, width and height. Once the dimensional weight is calculated, it is then compared to the actual weight of the package in some circumstances, and the larger of the two is used to determine the package’s actual billable weight. It was expected to affect about 30% of packages handled by those major carriers, with shipping rates expected to rise up to 25% on some packages.
Online retailers and other companies shipping lightweight packages have been especially impacted. The new rules have retailers and wholesalers scrambling to figure out how the changes will affect their shipping costs, profit margins and sales, and what they can do to minimize the impact.
Some options include:
- Renegotiating shipping contracts and adding regional carriers to the mix
- Changing box sizes and packing materials
- Adding technology solutions such as dimensional scanners, fit-to-size packing systems and multi-carrier shipping software
In June, Neopost USA, a mailing, business communications management and shipping hardware and software solutions expert, presented a DIM pricing webinar called “Dimensional Weight (DIM) Impact: One Year Later” that polled more than 500 attendees. Polling results revealed that shipping customers have opportunities in the marketplace.
Neopost USA learned:
- More than 70 percent of respondents have not made changes to their shipping operations as a result of DIM weight pricing
- Of those reporting some level of change, 85 percent changed their packaging
- More than 16 percent have renegotiated shipping terms with their carriers
- More than 18 percent made changes in their carrier
- More than 15 percent have added a new shipping carrier to their mix
- 5 percent switched to a different carrier altogether
Some retailers have embraced DIM pricing as motivation to upgrade their operations, making them more efficient and eco-friendly. When Ashley Stewart, one of the fastest growing national retail brands, realized their shipping costs would rise by 13%, they made changes to their fulfillment and shipping practices saving a lot of money (listen to the full case study on the Neopost USA DIM pricing Webinar).
“Many shipping customers are in a good position to realize cost savings by simply reviewing their current shipping practices with their carriers to determine the best available deal,” says Christopher M. O’Brien, Neopost USA’s Executive Vice President, Communication and Shipping Solutions. “The new DIM requirements can be confusing, but there are opportunities to save money. And every business owner I know wants to save money.”
The Neopost USA DIM weight pricing webinar is available at these locations: