How to Lower Shipping Costs with Dimensional Weight Pricing
“Dimensional Weight Pricing” is a new trend in the shipping industry that sets the shipping price based on package volume as well as weight. A formula is used which calculates the amount of space a package occupies in relation to its actual weight.
In other words, this pricing method takes into account the exterior package size (i.e. the amount of space a package occupies when in the cargo area of the transport vehicle) in relation to its weight, to determine the shipping price. The dimensional weight calculation will apply if it the volume occupied is greater than the actual weight – which can result in a 20 to 30% increase in shipping costs.
The largest overnight delivery carriers (FedEx and UPS) announced in June 2014 that they would apply dimensional weight pricing to all shipments, effective January 2015. And as these giants go, generally so goes the shipping industry! So, what can shippers do to avoid the cost increases they are likely to see as a result of Dimensional Weight Pricing?
Obviously getting more goods into the same box will save a significant amount of parcel freight cost under the new Dimensional Weight Pricing. Identifying the optimal box size reduces the number of parcel deliveries, increases picker thru-put and minimizes the use of unnecessarily large boxes. But this is often easier said than done!
The “box picker” typically has to decide the optimal box size, manually – choosing from 200 to 300 pre-fabricated boxes – which consumes a great deal of time making it labor cost intensive. Additionally, many material handling systems are optimized to handle medium and large box sizes efficiently and Dimensional Weight Pricing calls for increased use of smaller box sizes with more products placed in a given box.
The answer to meet these changes in the shipping industry is state-of-the-art parcel box optimization technology to ensure as many items are placed in a box as possible and that the optimal box size is selected. Advanced and executional cartonizing results in quantifiable reduction in parcel delivery cost, increased labor efficiencies and precise dimensional pricing.
Using box optimization technology has demonstrated up to 15 percent improvement in box utilization, 40 percent cost avoidance, 20-30 percent improvement in pick/pack labor efficiencies and a reduction in carbon footprint by using less corrugate.
To put it simply: right technologies = the right box for the right product(s) = the right price.
If you are in a consumer industry and aren’t yet affected by Dimensional Weight Pricing you soon will be. But not to worry! With 45 years of logistics expertise, the shipping experts at Clark Logic understand and are prepared for these (and any) changes in the shipping industry that may affect your bottom.
When you ship with us, we can help you analyze your supply chain to improve labor efficiencies and avoid cost increases associated with Dimensional Weight Pricing. We help you estimate the actual delivery cost for your customer and calculate the exact dimensional weight price. We can also assist in identifying the most appropriate boxes to use as well as how many pieces can fit in the box.
Letting Clark Logic’s logistics experts help you identify the right products for the right box at the right price provides an intelligent and easy way to avoid cost increases associated with Dimensional Weight Pricing.