On Thursday September 3, 2015 I attended the monthly learning/networking breakfast sponsored by Loyola University Chicago, Quinlan School of Business Supply and Value Chain Center(SVCC). Wholesalers, Retailers, Manufacturers, Distributors, (WRMD) are the target audience. The topic for this month was a presentation by Molly Frank, Retail Marketing Manager, Illinois District for UPS on Dimensional Pricing for boxes < 30 # which went into effect in 2014. Boxes that weighed 30 #’s or greater were already subject to Dim. pricing.
Molly started with an example: on case weighing 10 lbs. with the dimensions of 15x15x15 (LxWxH). Before Dim. pricing, the case would be billed at the actual weight, 10#.
The Dim pricing Formula to determine billable weight is LxWxH / Dim Factor = billable weight. The Dim factor or divisor utilized is 166. Note, this is the universal dim factor unless the shipper and UPS have agreed on a custom Dim, factor. In the example above, 3375/166= 20.3 lbs. The billable weight under Dim Pricing is now 20.3 rather than 10#. Dimensional Pricing change takes into account volume increases caused by E-Commerce where shippers pack low weight items in boxes that were too large. Weight per box went down, costs went up, and UPS was losing money on inefficient and extra unnecessary packaging. UPS has lost business in the < 30# per box segment to the USPS since the change. The average increase to a shipper with DIM pricing was 17%.
Smart shippers are changing their behavior to offset the impact of Dim. Pricing by: downsizing packaging; training shipping staff;more analysis in packaging sizes; use of “cut down” boxes rather than having 1 or 2 box sizes;increasing use of “poly bags”; better order consolidation, multiple cases going to the same address. Other points from Molly’s presentation:
Joe Lombardo, NGNF (nice guy no freight)