DIM Weight Pricing Is Infiltrating Other Modes of Shipping

What impact has DIM pricing had on your shipping costs since FedEx and UPS started applying the charge in 2014 — and other small parcel carriers soon followed suit? If you ship both small parcel and LTL, that impact is going to increase, if it hasn’t already, and especially if you ship large, lightweight residential and commercial shipments.

Defining DIM

Dimensional weight pricing is a method used by carriers to calculate the fee for transporting a shipment according to its volume: the amount of space it takes up in relation to its weight. The main purpose is to encourage shippers to package their products more efficiently, rather than sending large shipments containing mostly lightweight packing material.

DIM is calculated by multiplying weight by height and dividing by a DIM factor, which is a constant number set by the carrier. The weight that the carrier actually bills you for is the greater of the dimensional weight or the actual weight.

LTL joins the party

Seeing the obvious advantages in using this pricing model, many freight carriers have followed the lead of UPS and FedEx, especially for LTL, among them FedEx Freight (as you would expect), Old Dominion, and YRC Worldwide.

Those and other carriers are investing in specialized technology to calculate DIM weights — machines that capture a 3D measurement of shipments — to enable them to accurately charge shippers based on shipment dimensions.

To accommodate this new pricing method, new freight classes have been created that are determined by weight + the space occupied on the delivery truck, and costs have risen by 20% or more for some shippers. On top of the annual base rate increase, accessorials, fuel surcharges, and other fees, the effect on the bottom line is significant.

There’s a silver lining

There will unquestionably be an initial financial hit as shippers adjust to DIM pricing. However, in the long term the benefits will also make an impact, not only in the micro but also in the macro picture.

Most immediately, this pricing model will help carriers to offset the blow they have taken in dealing with the driver shortage combined with the rapid growth in ecommerce, which has resulted in many carriers struggling with significant capacity shortages.

The capacity issues will also be alleviated by shippers palleting their products less wastefully — using the smallest feasible solution rather than a large carton or crate filled with lightweight packing material for a small product. In fact, some carriers are making their research available to shippers to help them optimize packaging and palleting. More efficiency in this realm may have other trickle-down benefits for shippers too, such as more efficient use of warehouse space, lower materials costs, and even reduced HR expenses.

In the macro picture, the obvious benefits are environmental. More efficient packaging and palleting = less waste and reduced strain on natural resources. And if carriers are transporting more efficiently packed loads, fuel usage will be reduced, which will reduce both carriers’ costs and the damage to air quality.

Even taking into account solely the financial benefits, expect more and more carriers to be motivated to implement DIM weight pricing.

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