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©2015 Neopost USA Inc. All Rights Reserved.

DIM WEIGHT: ONE YEAR LATER

©2015 Neopost USA Inc. All Rights Reserved. 2

• 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

Agenda


Today This Is How Most of Us Ship


DIM Weight: An Unavoidable Occurrence

DIM = L" x W" x H" volumetric divisor

(parcel’s cubic volume)

(parcel’s density) weight

It was inevitable… – Price Increase Based on Package Sizes – Common Sense

• Shipping Companies = Cube (Vehicles + Fuel + Facilities) + Labor

What is Dimensional Weight?

166


How Has DIM Weight Evolved?

Up to 2011 DIM Weight

2011 - 2014 DIM Weight

2015 - ? DIM Weight

194

3 cubic feet +

>1 lb.

L x W x H Dimensional Weight (lbs.)

Dimensional Weight (lbs.)

Dimensional Weight (lbs.)

166 L x W x H

166 L x W x H

1. DIM Weight used to use a 194 divisor; it is now 166 2. DIM Weight used to be in place only for packages 3 cubic feet+; it now applies to all parcels 3. 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


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!

Concepts to Remember


• Calculating the Dimensions ‒ Box Measurement

• 11.6” = 12’’ (UPS) • 11.6” = 11.6” (FedEx)

• Calculating DIM WEIGHT

‒ 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

Dimensional Weight Rounding

L" x W" x H"

volumetric divisor

(parcel’s cubic volume)

(parcel’s density) 166


• 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

Domestic Versus International


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

Who Does It This Way?

* 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.


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


Changing Packaging & Operations

Utilizing Different

Services

Rate Shopping Carriers

How Have Shippers Reacted?


• Limiting box sizes (procurement)

• “Right sizing” packaging to product ‒ Reducing unused space per carton (cube utilization) ‒ Corrugated boxes

• Consolidation ‒ 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

Shipper’s Reaction: Packaging & Operations

*“Attack the Data, not the Divisor,” Brittany Beecroft, Director of AFS Parcel Pricing. Parcel Media, March 2015


• 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)

Don’t Forget: DIM Affects Mailers Too!

*Image and content information on this slide courtesy of Sealed Air Corporation


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)


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?



• 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)



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!

Shipper’s Reaction: Negotiating with Current Carriers

The three scenarios described above are highly unlikely to be accepted by a carrier and generally only reserved for larger

shippers.


Shipper’s Reaction: Utilizing Different Services & Carriers

• Work-share products (final mile) • Postal Injection products

‒ Overall price point is considerably lower

• Going back to using air/overnight services ‒ Better negotiating; reduce overall spend

• LTL/consolidation • Density-based pricing is being discussed

• Multiweight/Hundredweight services

• Regional parcel carriers

• USPS®

• Flat rate shipping options


• 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)

‒ 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

Shipper’s Reaction: B2B

Ineligible for hundredweight services

Eligible for hundredweight services


The value of your divisor matters—but it’s not everything ‒ Current DIM Divisor is 166

Impact: Isn’t It Just Nickels and Dimes?

2015 Dimensional Weight Impact: 173 Divisor DIM Logic Used Affected

Volume 4-Week Cost Annualized Cost Cost Increase over

2014

2014 DIM Logic 268,653 $1,183,808 $15,389,504

173 Divisor (Dim Logic) 268,653 $1,355,019 $17,615,247 +$2,225,743

Key Takeaway: It’s not just the divisor that impacts managing the cost of DIM Weight changes

2015 Dimensional Weight Impact: 300 Divisor DIM Logic Used Affected

Volume 4-Week Cost Annualized Cost Cost Increase over

2014

2014 DIM Logic 140,848 $600,629 $7,808177

300 Divisor (Dim Logic) 127,805 $596,744 $7,757672 +$176,345

Customer Example 2*

Customer Example 1*

*“Attack the Data, not the Divisor,” Brittany Beecroft, Director of AFS Parcel Pricing. Parcel Media, March 2015


• 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

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



• 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)


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

What’s the shipper’s plan starting today?


Questions

dim weight - wordpress.com · 2015. 6. 7. · sneakers kid’s backpack : toy truck . toaster :...

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