DIM WEIGHT:
ONE YEAR LATER
©2015 Neopost USA Inc. All Rights Reserved.
Agenda
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What is Dimensional Weight and why is it here now?
•
What have we seen so far?
•
What are we seeing as trends?
•
What is likely to happen in the future?
•
How can you prepare for the rest of 2015 and beyond?
•
Q&A
©2015 Neopost USA Inc. All Rights Reserved.
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Today This Is How Most of Us Ship
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DIM Weight: An Unavoidable
Occurrence
What is Dimensional Weight?
DIM =
weight
L" x W" x H" (parcel’s cubic volume)
volumetric divisor (parcel’s density) 166
It was inevitable…
–
Price Increase Based on Package Sizes
–
Common Sense
•
Shipping Companies = Cube (Vehicles +
Fuel + Facilities) + Labor
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How Has DIM Weight Evolved?
Up to 2011
DIM Weight
Dimensional
Weight (lbs.)
2011 - 2014
DIM Weight
Dimensional
Weight (lbs.)
2015 - ?
DIM Weight
Dimensional
Weight (lbs.)
LxWxH
194
LxWxH
166
3 cubic feet +
LxWxH
166
>1 lb.
1.
2.
3.
DIM Weight used to use a 194 divisor; it is now 166
DIM Weight used to be in place only for packages 3 cubic feet+; it now applies to all parcels
DIM Weight used to only apply to all weights with air services; they now apply to both air and ground
*Dimensional weight calculations based on publicly available carrier rate information
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Concepts to Remember
 Actual Weight
 Dimensional Weight
 Billable Weight
‒
Measuring Dimensions:
Round Up or Down (depends on
carrier)
• UPS rounds up or down
• FedEx uses actual for calculating the
package measurement
‒
Calculating the finaL DIM
Weight—ALWAYS Round UP!
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Dimensional Weight Rounding
•
Calculating the Dimensions
‒
•
L" x W" x H"
(parcel’s cubic volume)
volumetric divisor (parcel’s density) 166
Calculating DIM WEIGHT
‒
•
Box Measurement
•
11.6” = 12’’ (UPS)
•
11.6” = 11.6” (FedEx)
13.66” x 13” x 13.3 = 14.23” (always
round to dim weight of 15”)
A shipper is billed the greater of
actual weight or dimensional weight
‒
‒
Based on outside box dimensions
It’s the dimensions of the box WITH
PRODUCT INSIDE that matters
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Domestic Versus International
•
•
The calculation is L X W X H/166” inches
for US domestic ground and air packages
‒ Fractions of inches are rounded up
or down
US Export International Ground and Air
packages utilize a divisor of 139”
With international fees, surcharges, duties & taxes and DIM
as a factor, managing costs becomes more important
for international shipping than ever before
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Who Does It This Way?
Packages subject to DIM Weight
Calculation used (domestic services)
FedEx Express® and FedEx Ground® Services
Length X Width X Height, divided by 166
UPS Air® and UPS Ground® Services
Length X Width X Height, divided by 166
USPS® parcel services (excludes USPS Parcel
Select®)
Length X Width X Height, divided by 194 (packages traveling 1000 miles
or greater) & if package exceeds 1 cubic foot in size)
UPS SurePost®
Length X Width X Height, divided by 166
FedEx SmartPost®
Does not currently charge for DIM (as of June 2015)
OnTrac (regional parcel carrier)
Length X Width X Height, divided by 194
Spee-Dee Delivery© (regional parcel carrier)
DIM only applies for packages with combined length and girth over 130”.
Packages 130”-170” < 100lbs = flat dimensional fee; > 100lbs + flat fee
Lone Star Overnight® (regional parcel carrier)
DIM applies for to all parcels greater than 1,728 cubic feet with a divisor
of 166, for both its ground and express services. Any package smaller
than 1,728 cubic inches will be billed at actual weight.
Eastern Connection™ (regional carrier)
Length X Width X Height, divided by 194
PITT OHIO (regional carrier)
DIM applies for parcels 3 cubic feet (5184) or greater at a divisor of 194
Prestige Delivery Systems © (regional carrier)
DIM applies for parcels 3 cubic feet (5184) or greater at a divisor of 194
LaserShip® (regional carrier)
DIM applies for parcels 3 cubic feet (5184) or greater at a divisor of 194
* All information in the chart above is based on publicly available sources as of June 2015 or direct contact with the carrier and their policies.
Neopost USA strongly recommends contacting individual carriers to understand their latest policies on dimensional weight rating. Note that
carrier policies can be subject to change.
©2015 Neopost USA Inc. All Rights Reserved.
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Effects of DIM Weight Pricing
Product
Men’s
sneakers
Kid’s
backpack
Toy truck
Toaster
Price by
Weight*
$8.05
$7.17
$7.17
$7.17
Price by
Dimension
$9.11
$9.11
$9.47
$9.66
Percentage
change in price*
UP 13%
UP 27%
UP 32%
UP 35%
Note: Percentages rounded. Rates calculated using zone 5 shipping rates for one carrier
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How Have Shippers Reacted?
 Changing Packaging &
Operations
 Utilizing Different
Services
 Rate Shopping Carriers
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Shipper’s Reaction:
Packaging & Operations
•
Limiting box sizes (procurement)
•
“Right sizing” packaging to product
‒
‒
•
Consolidation
‒
‒
•
Reducing unused space per carton (cube utilization)
Corrugated boxes
Less overboxing
Palletizing/LTL
Alternative packaging options
‒
‒
‒
‒
Padded envelopes
Airbags/pouches
“Fold down” on mailers
Packaging built on-demand
•
Package testing/labs
•
Technology & measurement tools
‒
‒
‒
Dimensional scanners
Accurately weighing packages
Accurately measuring box dimensions
*“Attack the Data, not the Divisor,” Brittany Beecroft, Director of AFS Parcel Pricing.
Parcel Media, March 2015
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Don’t Forget: DIM Affects Mailers Too!
•
•
•
•
Carriers use scanning technology
measuring all angles
Scanning technology creates a
“virtual box” when measuring
mailers measurement purposes
Folding down unnecessary space
can reduce DIM for mailers
Switching to a mailer can qualify
you for mail injection or last mile
services (final mile delivery by
the USPS)
*Image and content information on this slide courtesy of Sealed Air Corporation
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Shipper’s Reaction:
Packaging & Operations
What consumers believe when it comes to packaging

Tells how much a retailer cares about them (66%)

Relationship with a retailer would be impacted if
order received was damaged/ broken (58%)

Reflects the value of the shipment – the better the
packaging, the better the product inside (48%)
*Sealed Air & Harris Poll White Paper: Dimensional Weight—Don’t Let It Weigh You Down (2015)
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Shipper’s Reaction:
Packaging & Operations

Mandating employees to weigh &
measure EVERY package
w/technology tools

Getting rid of manual air waybills

Billing back shipping charges

Auditing invoices

Returns: what packaging is used?
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Shipper’s Reaction:
Packaging & Operations
•
Returns
‒
1 in 5 packages is a return
‒
Largest inhibitor of B2C e-commerce
‒
Common scenario: return one item of
a multi-piece purchase in the original
packaging
‒
Many customers return items in
packaging that is not optimal (i.e.
shoebox)
©2015 Neopost USA Inc. All Rights Reserved.
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Shipper’s Reaction:
Negotiating with Current Carriers
1. Negotiating a tiered DIM structure
‒
Below a certain threshold (e.g. 3 lbs),
a certain divisor is used
2. A reprieve for one to two years
from the DIM change
3. Negotiating the actual billed weight

Don’t forget about returns or inbound shipments as
part of dimensional weight calculations!
The three scenarios described above are highly unlikely to be
accepted by a carrier and generally only reserved for larger
shippers.
©2015 Neopost USA Inc. All Rights Reserved.
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Shipper’s Reaction:
Utilizing Different Services & Carriers
•
Work-share products (final mile)
•
Postal Injection products
‒
•
Going back to using air/overnight services
‒
•
Overall price point is considerably lower
Better negotiating; reduce overall spend
LTL/consolidation
•
Density-based pricing is being discussed
•
Multiweight/Hundredweight services
•
Regional parcel carriers
•
USPS®
•
Flat rate shipping options
©2015 Neopost USA Inc. All Rights Reserved.
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Shipper’s Reaction: B2B
•
Package consolidation,
palletized LTL freight,
hundredweight/multi-weight or
zone skipping services
‒
What are hundredweight or
multi-weight services?
•
‒
Discounted rates, on a per lb basis,
on multiple parcels going to same
address (or zip code, depending on
carrier)
Ineligible for hundredweight services
What is a zone skip?
•
•
Shipper consolidates
orders/packages and sent en masse
to a sorting facility in a closer zone
Not recommended for time-critical
shipments
Eligible for hundredweight services
©2015 Neopost USA Inc. All Rights Reserved.
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Impact:
Isn’t It Just Nickels and Dimes?
The value of your divisor matters—but it’s not everything
‒
Current DIM Divisor is 166
Customer Example 1*
2015 Dimensional Weight Impact: 173 Divisor
DIM Logic Used
Affected
Volume
4-Week Cost
Annualized Cost
2014 DIM Logic
268,653
$1,183,808
$15,389,504
173 Divisor (Dim Logic)
268,653
$1,355,019
$17,615,247
Cost Increase over
2014
+$2,225,743
Customer Example 2*
2015 Dimensional Weight Impact: 300 Divisor
DIM Logic Used
Affected
Volume
4-Week Cost
Annualized Cost
2014 DIM Logic
140,848
$600,629
$7,808177
300 Divisor (Dim Logic)
127,805
$596,744
$7,757672
Cost Increase over
2014
+$176,345
Key Takeaway: It’s not just the divisor that impacts managing the cost of DIM Weight changes
©2015 Neopost USA Inc. All Rights Reserved.
*“Attack the Data, not the Divisor,” Brittany Beecroft, Director of AFS Parcel
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Pricing. Parcel Media, March 2015
DIM Case Study: Ashley Stewart
•
•
•
•
Among fastest growing
national retail brands
Ranked as one of the most
engaged brands on Facebook
& social media
Omni-channel sales &
marketing leader
Unprecedented levels of
profitability—but profitability
could have been affected by
DIM changes
©2015 Neopost USA Inc. All Rights Reserved.
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DIM Case Study: Ashley Stewart
•
•
•
Rise in shipping costs by
13% after DIM
announced
$8.95 flat rate shipping
expected by customers
Shipping changes had
high risk of affecting
customer experience
©2015 Neopost USA Inc. All Rights Reserved.
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DIM Case Study: Ashley Stewart
•
•
•
Saved 6% by researching shipping practices and switching to bags for shipments 1lb
or less.
Now eligible for postal injection product (Mail Innovations)—expectation of 67%
decrease
Revamped retail fulfillment and utilized hundredweight service for larger shipments
A 48 ft trailer has 5m cubic inches
of space (approximate)
©2015 Neopost USA Inc. All Rights Reserved.
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What’s the shipper’s plan starting
today?

Evaluate your current process to see where DIM changes fit in

Are you measuring OUTSIDE packaging or the product?

Audit your invoices to see the impact

Implement technology, packaging and hardware tools to manage the
changes

Educate others in your organization about DIM & set up business rules

Evaluate the impact of returns

Shop around carriers and within your current carriers for options

Attend Parcel Forum 2015 (October 19-21) in Chicago to hear more from
speakers and exhibitors on the best ways to manage DIM Weight
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Questions
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