m
at
er
ia
l
h
a
nd
l
i
n
g
u
p
dat
e
CU
B
ING
AND
WE
IGHI
NG
work with clients to find the best packaging configuration
for their products, according to Turney Thompson, vice
president of Kenco Transportation Management, one of
Kenco’s units.
It’s worth noting that it’s not just parcel shippers that
are feeling the effects of the dim weight revolution. Less-
than-truckload (LTL) shippers are affected as well. That’s
because a number of less-than-truckload carriers now offer
customers a choice when it comes to the method used to
determine their freight charges: dimensional weight pricing
or traditional “truck rate class” pricing—that is, pricing
based on how a product is classified under a formula estab-
lished decades ago by the National Motor Freight Traffic
Association (NMFTA), an industry group.
3PLs can help companies that use LTL services analyze
their options and decide what’s right for them. For example, Kenco recommends that its clients opt for dimensional
weight pricing if they have a homogenous product with
uniform shipping characteristics, according to Thompson.
He says Kenco has customers in the carpet industry that
have benefited from choosing dim weight
pricing. It’s a different story for customers that ship a mix of different-sized and
-shaped products on a pallet, however.
These shippers might find dim weight
pricing difficult to manage, Thompson
explains.
THE BASTARD CHILD
Some industry experts believe 3PLs
could be doing more for their customers.
According to Jack Ampuja, president of
the consulting company Supply Chain
Optimizers, many 3PLs are focused on
warehouse operations, which they see as
their core area of expertise, and do not
address packaging optimization. “They
just don’t see it as their responsibility,”
says Ampuja.
But Ampuja doesn’t lay the blame
solely at the feet of the 3PLs, saying most
companies view packaging as “a bastard
child” and therefore, pay it little or no
attention. Plus, in many organizations,
marketing or engineering “owns” the
packaging process, meaning logistics and
supply chain managers have little say in
packaging decisions, he adds.
Johnson of Kane Is Able agrees that
many companies don’t give packaging
the attention it deserves. Although packaging optimization is a service that Kane
Is Able offers, he says he doesn’t get the
sense that it’s a “front and center issue”
for most of the 3PL’s customers.
Furthermore, shippers sometimes
unwittingly behave in ways that inhibit a
3PL from giving its all to the effort. That
can happen, for instance, when the shipper fails to provide some incentive for
the 3PL to help it optimize its packaging.
Many shippers pick their provider solely
on price but then expect it to absorb all
the costs for implementing innovative
solutions, says Ampuja. The 3PL, howev-
It used to be that shipping rates for packages measuring less than three
cubic feet were calculated based on the actual weight of the parcel as
opposed to a combination of the package’s weight and dimensions. This
meant that lightweight but bulky items—like pillows or lampshades—cost
less to ship than, say, bowling balls even if they took up a lot more room
on a truck. That all changed in 2015, when UPS and FedEx extended the
so-called “dimensional weight” (or dim weight) pricing system to smaller
parcels.
As for how you go about calculating a package’s dimensional weight,
the formula is as follows:
1. Measure the height, length, and width of the package at the longest
points in inches (include any bulges), and round to the nearest whole
number.
2. Multiply the height, length, and width to get the package’s cubic area.
3. Divide that number by the “dim factor” to get the dimensional weight
in pounds. UPS and FedEx currently use 166 as the dim factor for domestic ground shipments. However, both companies have said they plan to
shrink the dim factor to 139 at the turn of the year, meaning that more
parcels will be caught in the dim weight pricing net.
The dimensional weight is then compared with the actual weight of
the package. UPS and FedEx will use the larger of the two to calculate
the rate.
To illustrate how the move to dim weight pricing can affect rates
for low-density shipments, Justin Headley, marketing manager of the
dimensioning equipment maker CubiScan, provides the example of a custom-made pillow shipped in a box that measures 18. 7 by 14. 3 by 6 inches
(for a cubic size of 1,604 inches) and weighs four pounds, three ounces.
Under traditional weight pricing structures, the shipping charge would be
based on the product’s actual weight, in this case five pounds (ground
parcel carriers round up to the nearest pound).
Under dim weight pricing, the picture would look quite different.
Dividing the carton’s cubic size in inches ( 1,604) by 166 (the dim factor
in effect in late 2016) would result in a dim weight of 9. 66 pounds, which
would be rounded up to 10 pounds for billing purposes. Using the revised
dim factor of 139 would result in a dim weight of 11. 53 pounds, which
would be rounded up to 12 pounds.
In either case, the dim weight far exceeds the actual weight (five
pounds). Because the carriers use the larger of the weight figures to calculate the rate, the shipping cost will be at least twice as much as the shipper was accustomed to paying before the advent of dim weight pricing.
What is dimensional weight pricing?
