What began as a way to efficiently price air freight cargo space in 2007 has since gradually evolved into the de facto system of measurement for the entire shipping industry. Dimensional weight is here to stay, and the all-important dimensional divisor—the Rosetta Stone of shipping rates—continues to drop.
At the end of the day, the most important thing to know is that the lower the dimensional divisor, the higher the shipping cost. A few years ago the dimensional divisor for most major carriers was 194. Those days were short-lived however, and the number soon dropped to 166 for all packages over three cubic feet. Now, that threshold has been eliminated, and the dimensional divisor for 2017 is a staggering 139. (UPS will continue to price packages under one cubic foot using the divisor 166.)
How does the dimensional divisor work? In what ways does dimensional weight affect your shipping costs? Is there anything you can do about it? In what follows, we’ll take a look at the answers to these questions and more.
Dimensional Weight and the Dimensional Divisor
Dimensional weight is determined by multiplying a package’s length, width, and height, dividing by the dimensional divisor, and rounding up. Both FedEx and UPS charge whichever is higher: actual or dimensional weight.
Let’s take a look at an example. In 2016, a UPS Zone 5 shipment measuring 18x12x12 would have been billed at 16lb using the dimensional divisor of 166. Since the decrease of the divisor from 166 to 139 on January 2, however, this same box would now be billed at 19lb. At list prices, this increased weight would result in a net price increase of 8% to 20%, which is a lot higher than the average rate increases that UPS announced.
Because the dimensional divisor is, for the most part, standardized across the industry, the major carriers have their customers over a barrel. Like stock traders in 2008, companies nationwide that depend on shipping services watch nervously as the dimensional divisor continues to drop, wondering where the floor might be and how long it will take to get there.
Many companies assume they have no choice but to cross their fingers and hope the divisor doesn’t drop again anytime soon. For those in the know, however, there are a couple of things that can be done to counter the impact of dimensional weight.
How to Counter the Impact of Dimensional Weight
The most immediate way to offset the impact of dimensional weight is simply to pack your shipping boxes more efficiently. Eliminating every inch of unused space by increasing the amount of products per box shipped helps to mitigate the effect that dimensional weight has on your margins. Of course, there are only so many products that can fit in a single box. And for companies whose products are bulky, fragile, or otherwise awkward, there often isn’t any excess space to work with.
The best way to deal with a dimensional divisor that continues to drop is to negotiate a higher divisor of your own in your carrier contract. You shouldn’t expect to simply walk in and ask FedEx or UPS for a better deal, though. The key to negotiating a higher dimensional divisor is knowing exactly what type of number is possible. That is, you need to know what divisors other companies like yours are getting, and how to leverage that information to get your carrier to actually do something about your divisor.
Where can you find this kind of information? Only an expert can provide it. Working with a shipping industry insider to get localized insights about the dimensional divisors that other companies like yours are getting is the best way to optimize your negotiating strength when it comes time to talk numbers with your carrier.
You’d be amazed at what is possible when you have the right insight going into your negotiation. The reason this information is so hard to come by is that FedEx and UPS are desperate to keep negotiated dimensional divisors under wraps. They don’t want the general public to know what types of rates are possible with the right negotiations.
Like the temperature in Juneau in the middle of January, the dimensional divisor continues to drop, with no sign of where it might bottom out. Maximizing the space in each of your shipping boxes is a start at addressing the issue, but to make an appreciable dent in the impact that dimensional weight has on your bottom line, you’ve got to saddle up to the negotiating table. The opportunity to considerably increase your dimensional divisor is very real. Only by talking with an experienced shipping industry insider, however, can you hope to have the insights necessary to negotiate the best divisor for your business.
Schedule a Consultation
Ready to leverage the power of Shipping Intelligence for your company? Contact us today to schedule a consultation.Schedule Now