The 2014 holiday season marked the last Q4 end-of-year sales period where packages shipped based on actual weight. With the start of 2015, UPS and FedEx instituted a dimensional DIM weight pricing structure.
The US Postal Service has since adopted this pricing model, also referred to as DIM weight pricing. This has changed the way freight companies calculate shipping charges.
The model means that if you are an eCommerce seller you need to consider size as well as weight. This may change how you package and ship your products, so it’s important to understand DIM weight.
Why DIM Weight Pricing?
Shippers like UPS and FedEx have a limited amount of real estate. Every inch of space in their trailers and delivery vans is valuable. This space has become more and more prized as the volume of goods shipped continues to increase.
As eCommerce sales grow each year, this space will get even tighter. Bureau of Transportation Statistics (BTS) figures show a large jump in the volume of freight shipped between 2012 and 2015. BTS predictions for 2045 show a huge increase in shipping.
In the past, shippers calculated the shipping fee based on the weight of a parcel and the zone. The zone represents the distance the package will travel. DIM pricing adds cubic volume as a factor in calculating the price. Each shipper uses a number called the DIM factor to calculate a package’s dimensional weight.
The cost of shipping is whichever is greater between the DIM weight and the actual weight. A package with a dimensional weight of 8 pounds and an actual weight of 5 pounds would ship as 8 pounds. If a package with the same dimensions had an actual weight of 10 pounds, the shipping charge would be based on 10 pounds.
UPS, FedEx, and USPS each sets its own DIM factor. This is the number by which you multiply the package dimensions to find the weight. These companies update their DIM factors every year. Red Stag Fulfillment has created a DIM weight calculator. This allows you to see what it will cost to ship an order with each of these major freight companies.
Understanding Weight Pricing
To understand the effect of DIM pricing on your eCommerce shipping costs, it’s helpful to look at an example.
Let’s say you’re shipping a new, carbon fiber motorcycle helmet in a 12” x 12” x 12” box. Between the helmet, box, and packing filler, the total actual weight of the parcel is 5 pounds.
Because of DIM pricing, your parcel may not actually be billed at 5 pounds. To calculate your this weight, we take the box dimensions divided by a DIM factor.
Dimensional shipping pricing has the greatest effect on businesses shipping lightweight but bulky items such as lightweight helmets.
How to calculate:
The formula to calculate DIM weight is:
(Height x Width x Length) / DIM Factor = DIM Weight
In our example, if you shipped the motorcycle helmet using UPS, you would use a DIM factor of 166. The calculation would look like this:
(12 x 12 x 12) / 166 = DIM weight of 10 pounds
If you shipped the same helmet via FedEx, with a DIM factor of 139, the calculation would look like this:
(12 x 12 x 12) / 139 = DIM weight of 13 pounds
USPS has the highest DIM factor (194). Therefore, its DIM weights are the lowest. The calculation for shipping by US Mail is:
(12 x 12 x 12) / 194 = DIM weight of 5 pounds
In the case of the Post Office, the DIM weight for this parcel matches the actual weight. If you ship via FedEx or UPS, you would pay for shipping either 10 or 13 pounds.
How to Reduce the Effect of DIM Weight on Your Shipping Costs
Obviously this pricing has massive implications for eCommerce businesses. If you’re shipping kettlebells, DIM weight pricing won’t change your shipping costs. Kettlebells are heavy and compact, so their actual weight will always exceed the DIM weight. Costco’s 93” teddy bear, on the other hand, is about the same size as a refrigerator but much lighter. The giant stuffed bear in a bear-sized box would cost the same to ship as a heavy refrigerator.
The good news is that there are ways to minimize the negative effects of this pricing for you and your customers.
Reduce Parcel Size
If you have the option to ship smaller, this can make a big difference. For example, if you squeezed all the air out of a 93” Costco bear, it would ship for much less than a fridge. Reevaluating your box sizes and packing methods could help you fit more products into smaller boxes. A great example of this is mail-order mattresses. If you’ve ever ordered a mattress online from a company such as Casper, you’ve seen this in action. Your mattress arrived vacuum-packed and expanded to its full size only after you removed the packaging. That mattress shipped based on actual weight rather than DIM weight. An order fulfillment warehouse can provide you with expert advice on packing your orders to reduce the DIM weight.
Negotiate Your DIM Factor
If your business ships a large volume of parcels per day, you can negotiate a better DIM factor with FedEx and UPS. This is the same kind of negotiation you’ve had for your shipping rates. Just be sure to remember your lessons from high school algebra (yes, that algebra class is useful in the real world). The larger your denominator, the smaller your solution. As of this writing, UPS uses 166 and FedEx uses 139 as their standard DIM factors. In your negotiations, try to increase this number as much as possible. A higher DIM factor equals lower DIM weight charges.
Partner with a World-class 3PL Provider
A fulfillment warehouse has the leverage to negotiate a much better DIM factor. Your small or medium-sized business won’t be able to match this rate on its own. A 3PL company with a high DIM factor could eliminate the negative effects of DIM weight on your shipping costs.
Who Needs to Worry About DIM Weight?
The most common weight for eCommerce packages is 1 to 2 pounds. If your product is small and light, this pricing won’t affect your shipping costs. Clothing items are a great example of this kind of eCommerce product. Because clothes are light and small, shipping charges are usually based on actual weight rather than DIM weight.
Where this pricing becomes a concern is for items that are bulky but not very heavy. For some of these items, packaging changes can reduce DIM weight (and waste). A good example of this is small electronics that come in large packages. An order fulfillment company can help you find ways to ship delicate items safely in smaller packages. This will reduce the DIM weight of your shipments.
If your products are large for their weight, like the helmet in the example above, you might not be able to avoid extra charges. The best way to reduce your shipping costs is to negotiate a higher DIM factor with your shipper. Or you could outsource your fulfillment to a 3PL provider with a high DIM factor.