You’ve probably heard a lot about Dimensional Weight Pricing (DIM Pricing) this year. Now that FedEx and UPS are utilizing this pricing method for all small packages. Although it is optional for LTL Freight shippers, it is anticipated that it will replace the current pricing method, using NMFC classification, in the not-too-distant future. So let’s take a look at what DIM pricing is and what you can do to minimize its impact on your bottom line.
So what is Dimensional Weight Pricing?
Also known as volumetric or density-based pricing, DIM Pricing is a method of calculating a billable weight for a shipment based on a minimum density imposed by a freight carrier. This is the amount of space a package occupies when in the cargo area of a transport vehicle.
Calculating Dimensional Weight
It is calculated by multiplying length-in-inches by width by height and dividing the product by a DIM factor (DIM factors vary by carrier). The resulting dimensional weight is compared to the actual weight of the shipment and the greater of the two is used as the billable weight.
Why DIM weight?
With a shortage of drivers and equipment, freight carriers are looking for ways to maximize their capacity. The hope is that dimensional weight pricing will motivate shippers to use more efficient packaging by reducing excess packaging materials and increasing shipment density. This is expected to increase throughput of existing capacity. It is also seen as a way to reduce fuel costs and optimize existing driver and equipment resources.
Reclassifications past and present
It used to be that carriers would pull aside questionable pallets and support staff would put the pallet on an industrial scale to weigh it. Then they’d use a tape measure to measure length, width and height. Once pallet cube and weight were known it was easy to compute density and identify freight class, which is based primarily on density.
Today, efficient LTL carriers have scales attached to each fork lift truck so that pallet weights can be verified whenever desired without slowing the operation. Similarly, smart LTLs are investing in equipment that, with the aid of lasers, can measure, weigh, and calculate shipment density. Some of these devices are so advanced that weights and measures can be legally certified for accuracy by state agencies.
Taking it a step further, the measuring unit can also take a photograph of the freight and apply a date so there’s no question as to which product was analyzed and when.
Minimize the impact of DIM pricing
With this sort of technology involved in the process DIM weight is a factor that’s here to stay. To prepare, there are many things you can do to minimize the impact of dimensional weight pricing. A few ideas of where to start:
1.) Be sure to record the exterior dimensions of your shipment AND its weight on your bill of lading.
2.) Assess your current packaging materials to assure that they are very sturdy so that they won’t develop bulges or change shape during shipping.
3.) Evaluate your package sizes and use the smallest one that will provide enough protection for contents while minimizing bulk.
Diminishing the impact of DIM pricing is more involved than can be addressed in this article so we will be providing additional information in our next post.
Help is available
In the meantime contact your American Group representative or call us at 1-866-553-6608 for assistance with how to improve your packaging and shipping to reduce the impact of Dimensional Weight pricing on your bottom line.