Dimensional Weight Pricing
Dimensional Weight Pricing Change
Earlier this year, major parcel carriers announced what could be the industry’s single largest rate hike in 15 years. Starting on January 1, 2015, parcel carriers will increase the price on ground shipments smaller than 3 cubic feet, impacting shipping costs and packaging design for shippers across the nation. Unless shippers adequately prepare, some experts estimate that they can expect an average 30% cost increase on small parcel shipments.
What is DIM?
DIM, or Dimensional Weight Pricing, utilizes a formula to calculate billable weight based on a package’s volume. You can calculate DIM for your parcel by multiplying Length x Width x Height and dividing the product by a DIM factor. For FedEx and UPS, that DIM factor is 166, as shown below:
Parcel Pricing Change
Currently, the shipping rate for parcels that are less than 3 cubic feet is based on weight, while packaging larger than 3 cubic feet are subject to DIM weight pricing. Starting next year, all ground shipments will be subject to DIM weight pricing, and parcel carriers will charge whichever is the greater rate based on the package’s weight or DIM rate.
Up to 75% of the most widely used box sizes in parcel will be impacted, meaning that manufacturers and shippers of all types that rely on small parcel shipping will be hit hardest.
Minimize the Impact on Your Business
With 2015 right around the corner, now is the time to be proactive and create a plan for how your business will confront the DIM pricing changes. What are some ways you can prepare for the rate hike?
- Be more efficient with your packaging – Train your employees how to find the most cost-effective boxes or packages for each shipment and make different packaging options available.
- Compare and optimize your carriers – Shop around for the carrier with the best pricing options for your most common shipment sizes.
- Expect transparency – Your carrier should make billing easy and transparent, enabling you to choose the best options for your business.
- Speak with an expert – Kenco Logistic Services has more than 50 years of experience engineering logistics solutions and optimizing supply chains. Take advantage of our Free Parcel Analysis to learn how you can mitigate costs.
Schedule a Free Parcel Analysis
Avoid the 30% rate hike on small parcel and take advantage of our free analysis. Contact us today about our Free Parcel Analysis and we will get in touch shortly to schedule an analysis of your parcel shipments. We will provide custom recommendations for how your company can optimize packaging, carriers and more to reduce the impact of DIM pricing on your business.