If DIM weight surcharges and the like are increasing your parcel costs, here are the steps you can take to mitigate their effects.
By: Justin Cramer
While shipping may seem simple to customers (or even company executives), shipping managers know that it’s anything but. Much more goes into shipping than simply getting the order from the warehouse to the customer’s home. Shippers must take into account when the customer wants to receive their order, the packaging and, of course, the shipping costs. They must also keep up with the latest technologies and regulations in the constantly changing shipping industry. Case in point: dimensional (DIM) weight.
It’s hard to believe, but DIM weight was first introduced to ground shipments only four years ago. Before then, shippers were simply charged for the weight of their shipment, no matter the size of the parcel. All of that changed when two of the largest carriers, FedEx and UPS, introduced DIM weight pricing for all ground shipments.
As many know, DIM weight is normally calculated for ground shipments by the length, width, and height of each parcel that is over three cubic feet, regardless of the shipment’s weight. This was a big change for shippers in 2015, especially since many of them experienced significantly higher shipping costs – some as high as 30%. Unfortunately, these DIM weight rates are only continuing to increase each year, forcing many shippers to continue to find new ways to combat these higher shipping charges as to avoid impacting their bottom line.
For this reason, shippers are constantly reviewing their shipping procedures and turning to different solutions and shipping strategies. By leveraging the following strategies, companies can exponentially reduce shipping costs while still meeting customer demands.
Renegotiate shipping contracts with multiple carriers. Before reaching out to your main shipping carriers to negotiate better rates and update contracts, obtain rates from all viable carriers. It may seem obvious, but knowing what company offers the lowest rate can help you negotiate with your current carriers, as well as update your contract. Your carrier is able to review the number of parcels your company shipped per day/month/year and the average parcel size so they can create a unique contract designed just for your business. This will dramatically save on shipping costs and help boost business.
Consider a variety of carriers, including both regional and local. Many companies may not realize local couriers can transport shipments 80 to 100 miles within a specified zone. This is an excellent mode of transportation for last-mile delivery as it can provide a personalized, caring service for customers. Regional carriers also offer longer time schedules for pick-up and delivery, and they can even provide next-day delivery options to meet customer expectations. These carriers are especially beneficial for shippers as these services are oftentimes more cost-effective than large carriers, and not all utilize DIM weight surcharges.
Design packaging with DIM weight in mind. It’s no surprise DIM weight charges impact large lightweight items the most. However, all oversized parcels are losing shippers money. This is why it’s critical shippers design packaging that better fits these items in order to create the smallest parcel possible.
To do this, shippers can begin stocking many different types of parcel sizes in order to create these custom-fit packages. However, some shippers have found this strategy is not always feasible due to warehouse space. In these cases, shippers incorporate automated packaging solutions into the order fulfillment process. These systems measure, construct, tape, weigh, and label each order while creating a fit-to-size package. These parcels can be created in as little as seven seconds using only one operator, which allows for better efficiencies. These systems can also auto-box thousands of single- or multi-item orders per day, creating fit-to-size parcels with the lowest DIM weight.
Rate shop carriers and services using multi-carrier shipping software. Many shippers turn to shipping software that automatically rate shops their carriers and services to identify the best shipping option for every order, no matter the DIM weight. These shippers have found they can save a minimum of six percent in shipping costs and have increased savings with many different regional carriers and services, even without established contracts. Rate shopping also provides shippers with increased negotiating powers when the time comes to renegotiate with their current carrier contracts.
While DIM weight surcharges are a constant pain point for shippers, there are many strategies and solutions that can be incorporated into the fulfillment process that alleviate increased shipping costs. From updating contracts to utilizing multiple shipping carriers to new technologies, these solutions are easy to incorporate and can save you thousands. In the end, when the only constant in the shipping industry is change, shippers need to incorporate the best strategies and solutions into the warehouse in order to keep up with regulations and boost business.
Justin Cramer is Head of Sales & Marketing and Co-Founder at ProShip, Inc, the global provider of today’s #1 multi-carrier shipping software. Throughout his time at ProShip, Cramer has designed shipping solutions responsible for executing more than 1.1 million labels per day and has worked with many small to global shippers on achieving certified carrier labels.
This article originally appeared on pages 22-23 in the 2019 May/June issue of PARCEL.
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