Ask the Logistics Expert: What's dim weight and how do I calculate it?
Updated: Jul 1, 2021
How to find the dim weight factor for UPS, FedEx, USPS and DHL -- and how to calculate the dim weight (or dimensional weight) for a specific package
Outbound shipping - the service of taking a finished, single-order package and transporting it to a customer's home or business - is one of the largest overhead costs that e-commerce brands have. Figuring out how to minimize those costs is critical to making sure each e-commerce order is not a money-losing proposition. One of the first things a growing e-commerce founder - not just their logistics people - should understand is what dim weight is. The cost to ship small parcel packages is calculated based on weight, which sounds fairly straightforward. But logistics isn't just about weight - it's also about the total volume of space that packages take up. To accommodate lightweight yet bulky packages, the freight industry came up with the idea of “dimensional weight,” which is a theoretical weight that takes the length, width and height of a package into account. Each package has an actual weight and a dimensional weight, and the shipping carrier bills the customer at whichever is higher - also called the billable weight. (So shippers with small, heavy packages are not, in fact, winning out here.)
Dimensional weight is calculated as: (length x width x height) / dim weight factor. The dim weight factor (also called the dim divisor) is set by each particular shipping carrier. UPS and FedEx both use a standard dim weight factor of 139 (though UPS uses 166 for the retail rate). USPS uses a dim weight factor of 166. DHL uses 139. A higher dim weight factor is better.
Here’s what this looks like in practice:
A company ships a box that’s 12x12x12” and the actual weight is 4 lbs. If they have a standard FedEx contract with a dim weight factor of 139, the dimensional weight of that package calculates out to 12.42 lbs., which is rounded up to a dimensional weight of 13 lbs. (Any fraction of a pound is always rounded up to the next pound.) If that package is traveling to Zone 4 using FedEx Ground using the standard list rates as of mid-2021, the shipping costs increase from $12.32 to $14.59.
Most e-commerce packages weigh 1-2 lbs. so many, many packages are shipping at dim weight and not the actual weight. It’s critical for e-commerce business owners to understand how this will impact shipping costs, particularly when deciding at what price point to offer free shipping to customers.
Being efficient in packaging and not having extra, unnecessary space inside packages will minimize the effects of a dim weight factor. Whether you outsource fulfillment or do self-fulfillment, you will want to have very clear SOPs (standard operating procedures) that outline when to use which box sizes. You will also want to audit shipment and order data regularly to ensure compliance with the SOP. Not doing so can cost you dearly. Remember that 12x12x12" package? If the same 4-lb. (actual weight) shipment was in a 16x16x16" box, the billable weight is now 30 lbs. -- and the shipment that cost $14.59 to go to Zone 4 is now $22.76. That's $8 on one package, but if you ship 100,000 orders in a year and half of them ship in an unnecessarily large box, that's $400,000 per year in waste.
It also makes sense to look at bundling products into common package sizes and/or considering custom packaging that is the exact right size for your product bundles. For example, if you ship 1-lb. coffee bags, and customers tend to order one, two or four bags at a time, go ahead and offer those as bundles to encourage that ordering behavior. Price out custom packaging that is precisely cut to hold those bundles. The cost of custom packaging is often more than made up for when factoring in decreases in shipping costs, plus you get more professional packaging.
When negotiating a shipping rate contract with FedEx or UPS, novice negotiators focus almost entirely on the discounts they’re getting off the base shipping rates. While important, it’s one of many points that can be negotiated in a contract. (In a FedEx contract, there are 26 different points of negotiation on Home Delivery alone!) The dim divisor is one of the many negotiable items in a shipping carrier contract, and for many companies, it’s easily one of the most important. If you’re negotiating your own rates and ask the carriers for a better dim divisor, it’s typically not too hard to get them to go up to 194. If this is the most important point of negotiation in your contract, you will want to push it even higher. The highest dim weight factor we’ve heard of in recent years for a small- to mid-size shipper on small parcels is 300.
If you are finding it challenging to figure out the effects of a dim divisor on your shipping costs, or are interested in help negotiating a better shipping carrier contract with a better dim divisor, Ship Simply can help by analyzing your order and shipping data. Email us at email@example.com or go ahead and set up a no-obligation call with us to see if we can help you with your shipping or logistics problem.