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In past years, freight charges were based on very rough measurements of dimensions and weight. However, times have definitely changed more than a little.
Today, most carriers implement a DIM pricing method. This type of platform does away with weight measurements. Instead, it relies on physical size to provide a more fair and balanced pricing structure for shipped goods.
DIM pricing is utilized by all the major carriers including FedEx, USPS, and UPS. And while those giants of the logistics industry understand how this pricing scale works, many shippers still struggle with grasping how it is calculated. This also means that they really don't know what they are being charged for, nor how to budget properly to take into consideration DIM pricing.
Luckily, that's exactly what we are going to discuss in this blog post. We will explain exactly what DIM pricing is and provide some insight into how shippers can work with 3PLs to get the best rates possible for all of their shipping needs.
Several years ago, a few express overnight parcel companies began to implement a dimensional weight billing method for their customers. Essentially, DIM or dimensional weight is a pricing technique that is used in the commercial freight industry. Finding the DIM of any shipped goods is really easy, just multiply the length times the width times the height of your freight. Then, a DIM divisor is applied (more on that later). The end result is the dimensional weight of your freight.
Overall, this system simply swaps out the weight in preference of package volume.
This ensures that carriers receive fair shipping rates for larger, lightweight goods that still take up a lot of space in their shipping containers. But here's the catch, the volume of the package does not always equate to the price that is charged. True dimensional weight billing assigns a DIM measurement value to the individual package or pallet. This number gets compared to the actual weight of the package or pallet, and the greater value is charged to the customer.
One of the most important tools that FedEx, and UPS delivery and pickup couriers used in the past was a tape measure. When they picked up a package for delivery, it was common for them to measure the length, width, and height of the package. These numbers would be entered into their scanning equipment, along with the estimated weight of the package. Once the information was uploaded to the carrier’s computer system, a DIM weight calculation would be produced. The larger of the two numbers was the one that showed up on a customer's bill.
What caused a lot of frustration at call centers across the globe, was the lack of transparency on how the DIM weight calculation was determined. In today's transparent society, however, carriers have become more upfront with how they DIM weight pricing.
Noted below, is the generally accepted guideline for measuring dimensional weight. This same process is used across the global logistics industry so you never have to worry about it fluctuating too much.
The length, width, and height of the package is measured from the longest points on each side. These measurements take into account any gaps or bulges in the packaging. Pointy edges and bug lumps tend to produce inaccurate DIM weight measurements.
Once the three measurements have been completed, each of them will be rounded up to the nearest whole number. For example, if your package measures 12.1 inches in length, your DIM measurement is 13 inches. There is no rounding down with DIM weight.
The next step is to simply multiply each of the three dimensions to determine the cubic size of the freight.
Once the cubic size has been determined, this number is divided by a DIM divisor. This is a number that works as a dimensional factor and each divisor is unique to the individual carrier.
The DIM divisor is determined by the shipping methods used by the carrier. For example, an overnight express delivery company will likely have a larger DIM divisor than an LTL carrier, simply due to the restriction of weight with air freight way movement.
The DIM divisor is divided by the cubic size to produce a dimensional weight. If the dimensional weight is larger than the physical weight of the package, the DIM weight is used. Likewise, if the physical weight is greater than the DIM weight, the physical becomes the billing standard.
And that's it!
Just a little bit of basic math and you're able to fairly easily determine the DIM weight of just about any shipment. Of course, you need to know which carrier you are shipping with and ask for their divisor, first.
If you have any questions about DIM pricing or would like to explore opportunities for reducing your shipping charges, contact the team at Redwood Logistics today.