UPS and FedEx’s recent carrier dim weight rate changes have prompted shippers to look for new ways to cost-effectively optimize carton-packing processes. The latest generation of cartonization software uses complex algorithms to simulate carton-packing configurations in real time, avoiding dim rates whenever possible. Cartonization software has been around for many years, but until recently, most options haven’t taken transportation costs into account when determining the least expensive way of packing an order.
Why the sudden concern about dim weight charges? Simple: supply and demand. E-commerce volumes have squeezed parcel carrier capacity, especially during holiday rush periods. Over the last few years, parcel carriers have put a premium on shipment density by lowering the bar for when they will “tax” shippers for packing too much air in containers.
And you can’t blame them. Everyone has had the experience of opening a large carton almost completely filled with lightweight packaging material. After the 2015 holiday rush, FedEx CEO Fred Smith observed, “We were getting lots of packages that were one or two cubic feet and inside was a six-ounce stuffed toy.”
How Dim Weight Rating Works
Dim weights are calculated by multiplying the length, width, and height of a package, and then dividing that result by a special number, called a “dim weight divisor” or “dim factor.” The shipping cost is priced according to the higher of either the dim weight or the actual weight. FedEx and UPS reduced the standard dim factor for 2017 from 166 to 139, making it more likely than ever that shipments with too much air will be subject to dim weight rating.
How Cartonization Helps Avoid Unexpected Dim Rates
Avoiding unexpected dim weight rates requires proactive planning and management oversight. It’s not enough to just leave rate estimations in order entry to eyeballing SKUs or carton packing to the imagination of warehouse workers. Determining the most cost-effective way to pack an order is inherently complex. It requires a level of computation that is beyond the training of most packers. A more systematic approach is required. This is where cartonization software can pay big dividends.
New cartonization technology uses algorithms to instantly determine the optimal means of fulfilling an order, taking into account multiple variables including SKU dimensions and weight, available carton sizes, carrier dim factors, percentage fill, lay flat rules, “don’t pack with,” and other packing constraints. Results are returned in XML format or as diagrams to guide packers’ fulfillment plans.
Here are five ways cartonization can save you money:
- Cartons Too Large: Too much air in a carton can trigger an unexpected dim rate. Cartonization will select cartons that optimize density.
- Cartons Too Small: The temptation to “over-correct” and pack items into too many cartons can result in higher shipping costs. Cartonization will take aggregate minimum transportation charges into account when selecting cartons.
- Dim Rate Shop: USPS doesn’t apply dim factors for zones 1-4, and some regional carriers have higher dim factors. Cartonization will shop for more cost-effective dim rates.
- Flat Rate Cartons: FedEx One Rate and USPS Flat Rate cartons avoid dim rates. Cartonization rate shopping can identify flat rate carton alternatives.
- Dimensional Scale Validation: By validating cost-effective packing at point of shipping, cartonization is an excellent complement to dimensional.
Conclusion
With dim rates impacting the bottom line of every shipper, having a consistent, systematic way of managing packing has never been more important. Cartonization can help shippers calculate more accurate shipping charge estimates up front and then enforce more cost-effective packing processes in fulfillment.
For over 25 years, Bob Malley has helped thousands of businesses reduce costs and streamline logistics with transportation software solutions. As CEO of Pierbridge, Inc., Bob has built a global organization that developed Transtream, the only multi-carrier management software that has earned both FedEx Diamond and UPS/ConnectShip Platinum level status for excellence and customer adoption. He can be reached at 413.229.6619 or bob.malley@pierbridge.com.
