What is Freight Density and How Does It Impact Your Bottom Line Profit?
Among shippers and carriers alike, freight density is a hot button topic of late. The evolving changes in freight classification, density sub-groups, and the introduction of freight density measurement equipment has caused shippers to reexamine their supply chain functions due to its impact on bottom line profits. Freight density is a reality that everyone has to deal with in 2019 – so in the information below, we’ll outline some facts about cargo density, how it impacts daily FTL and LTL carriers, and most importantly – the impact of profitability on shippers and carriers.
The Basics of Freight Density
If you’re in the dark about freight density and have “Googled” this term and found us – awesome. Let’s explain some of the facts about freight density. Essentially, freight density is the space an item fills in relation to its weight. In the logistics world, the space that a shipment occupies has become just as important to carriers as weight because their objective is to move shipments as efficiently as possible. Increased freight density (meaning more empty space) is not conducive to the cost-effective movement of freight. Now let’s get scientific. If you’re curious about finding your freight density via mathematics, it’s rather easy. You simply divide the weight of the item in pounds by the volume in cubic feet. Modern carriers examine both the physical weight and the freight density to determine which is greater. Then, they charge the shipper the greater expense.
Freight Density and How it Impacts Your LTL Shipments
For those who have shipped products via Fed Ex Express or UPS in their own packaging may have noticed this on their monthly invoices. Initially, your 5-pound box heading to Memphis may have been estimated to cost you $25.00 for overnight service – but when your bill arrives, it’s magically $28.00. This isn’t because they are trying to price gouge or insert hidden costs – it’s because they are using dimensioners to determine the freight density or DIM-weights.
LTL carriers are starting to use the same technology when measuring your pallets and boxes. If your estimate is based on your measurements of weight or the simple size of the pallet, it does not factor the DIM measurement at the LTL depot. Often times, your estimates and the carrier’s final charges just don’t match. When this occurs, it can extend your freight invoice auditing process, and cause significant financial headaches.
How Freight Density Impacts Your Bottom Line Profits
When you are billed additional charges due to freight density, it dramatically impacts all areas of your business. However, there are other areas that freight density can impact including:
- On-time delivery: There are some carriers who will delay shipment on items that are ‘bigger’ than estimated. Since the carrier’s primary objective is to ensure each route is balanced, if your shipment takes up more space than it should, it can be bumped to future delivery. While this may only cause a minor delay, the impact to your customers might be significant.
- Reduced Customer(s): Today’s customer does not care about ‘freight delays’ due to measurement issues. If continual delays occur due to incorrect freight density measurements, the customer is likely to reach out to competitors.
The best resource for any shipper is, of course, an experienced 3PL.
A third-party logistics company has a clear understanding of freight density, DIM weights, and the equipment used to measure freight. They also can help shippers classify their LTL movements correctly – which can significantly reduce freight density issues.
If you’re tired of dealing with freight density issues, reach out to the experts here at Redwood Logistics.