DIMS DON’T HAVE TO BE DIFFICULT DIM charges are often a “gotcha!” for shippers. But with careful planning, you can avoid — or at least minimize — their impact. By Jeffrey Haushalter
any supply chains have been struggling to control costs and maintain budgets under the new dimensional (DIM) calculations put in place by FedEx and UPS. Those changes, introduced as part of the 2017 General Rate Increase (Figure 1), decrease DIM factors, add accessorials, and apply DIM surcharges against a larger pool of packages. While carrier negotiations around DIM factors and surcharges postpone some financial impact, there are additional ways to mitigate and even eliminate DIM surcharges from your operation. PROFILE YOUR DIM Review recent invoices to estimate the magnitude of DIM surcharges. Key fields to look at are billed weight versus scale weight and the handling accessorials that are being applied.
30 PARCELindustry.com MAY-JUNE 2017
Dimensional surcharges have three root causes: Item-level DIM, based on the inherent nature of what you sell Package-level DIM, based on how efficiently you overbox and/or overbag Order-level DIM, based on how customers order and how orders get fulfilled in your operation Plot every item sold on the following item surcharge grid (Figure 2), which looks at a product’s longest length and density. This grid assumes a single ship item, as is, without any additional packaging. Items plotted in the green shaded area are dense enough and short enough to avoid dimensional penalties. The remaining “trouble” items appearing in other sections of the grid incur one or more costly surcharges. Long term, trouble items represent your core dimensional dilemma, which is largely a function of the products you
choose to sell. Perform additional plots to recreate this analysis at the shipment and order level and incorporate additional volumetric surcharges, like girth. Share this analysis upwards and across your organization. It raises key questions about the items that are sold, how they come packaged from suppliers, the pricing that is sought from customers, and the profitability of selling DIM items. WORK WITH YOUR SUPPLIERS Recognize the diminished role retail packaging plays in an internet world. Where possible, work with suppliers to remove excess packaging, consolidate accessory boxes, and eliminate dead space. Focus on minimizing the largest offending dimensions of trouble items. This may involve disassembly, compression, nesting, and hiding. Opportunities found here are win-wins because they increase both storage and shipping density for suppliers and shippers.