Dim, Dimmer, Dimmest
It will be interesting to see how shippers react to the pricing changes announced by all the major carriers. The change with the most ripple effects may come from the new dimensional weight charges for oversize ground shipments. Oversize ground packages shipped by UPS, FedEx, and DHL—3 cubic ft., or 5,184 cubic inches or lager—will now be subject to DIM weight charges. That is, billable weight will be assigned according to whichever generates the greater charge, the actual weight or the dimensional weight.
Dimensional weight is calculated by multiplying a package’s length by height by width and then dividing by 194 (or by 166 for international shipments.) Some analysts are citing possible increases of as much as 75% for oversize domestic ground shipments under this new system.
Insult to injury: Shippers that aren’t already equipped to measure dimensionally may just have to wait for supplemental bills based on the carriers’ dimensional measurements. Something else to think about: Fuel surcharges are frequently based on billable weight rather than actual weight.
There’s always a silver lining for someone, so this may translate to good news for manufacturers of dimensional measuring equipment. We imagine Mettler-Toledo, Quantronix, and Canadian firm ExpressCube can expect lots of interest at this year’s ProMat show.
And just in case you were wondering where those numbers came from—194, 166—yes, they’re arbitrary. They’ve been around for a while as standard density factors, or weight per unit volume, used by the International Air Transport Association for air freight. Perhaps coincidentally, perhaps not, 1/194 of a pound per cubic inch works out to 1/7 the density of water. And the international factor, 166, is about 1/6 the density of water.
An IATA resolution a few years ago to change its international DIM factor to 138 (more like the density of sand?) was met with so much opposition that it has never been implemented. The UPS dimensional weight Web page does note that the IATA volumetric standards it is following are “subject to change without notice.†The U.S. Dept. of Justice has called the IATA standards “clearly a price-fixing agreement among horizontal competitors.â€
Be that as it may, this year’s rate increases go directly to the area of highest expenses for every direct merchant, outbound shipping. Every time the carriers do this to our companies they cause the consumer to be that much more wary of buying direct and paying shipping and handling, and they put that much more pressure on shipping and handling offset.
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