In my 25 years of experience in fulfillment and operations, I’ve managed warehousing, order management, and shipping for large merchants, such as Wine.com. I currently am co-founder of ShipJunction, a carrier management platform for ecommerce companies.
I’ve learned over the years that merchants need to understand shipping options and costs to effectively compete, and to offer their customers a better experience. This is not made easy by common carriers such as FedEx and UPS.
Two especially confusing issues are “time in transit” and “dimensional weight.” Both directly affect your shipping costs and your customers’ satisfaction. I’ll explain them in this article.
Time in Transit
One of the biggest misconceptions I hear when talking to ecommerce merchants is that ground services offered by both FedEx and UPS are not guaranteed time in transit. In fact, they are. This is very important. If utilized and messaged properly, shipping a guaranteed package via ground service instead of via air can save anywhere from $10 to $50 per package. Consumers will pay a premium for last minute, time-sensitive packages or gifts. But often it’s knowing when a package will be delivered that is most important for customers.
Make sure to have clear messaging during the checkout or closing process that states how many business days in transit until their package is delivered. Customers care about when the package will be delivered, not when it will be shipped or what service level or carrier you use. Providing a calendar or communication that illustrates this graphically — with choices of delivery dates along with shipping prices — helps paint a clear picture and ensures trust. Coming through in a pinch and delivering a quality product quickly and on time will help build your brand and generate customer loyalty and repeat business. Having a carrier you can count on to execute this for you and work within your business’s unique structure as far as pick-up times, dedicated drivers, good representatives, and direct lines to your local hub’s management are all part of the success equation.
Guaranteed time in transit maps are available from both FedEx and UPS. The illustration below is an example of a time in transit map from the San Francisco Bay area, with each color representing an additional business day of transit. You can get Time in Transit maps from FedEx and from UPS.
Another confusing area is dimensional weight charges. Dimensional weight is the theoretical weight of the package, or more simply the L x W x H of the box divided by the applicable dimensional factor. The result of this calculation determines at what weight you will be billed for the shipment — i.e., the larger of the actual weight or this dimensional weight calculation.
So what is the applicable dimensional weight divisor? Currently both FedEx and UPS use the same dimensional factor of 166 for domestic air shipments and 139 for international shipments. This was changed from the long held 194 to 166 domestically and from 166 to 139 in January 2011. Prior to the change, it was not uncommon to see an average shipper’s applicable dimensional weight result in a 100 percent increase over the contractual actual weight. With the new 166 factor this jumped to 120 percent.
Dimensional weight has long been used for air freight, and in January 2007 both FedEx and UPS implemented it for ground packages as well. The exception with ground however, is if the package total area — L x W x H — is less than 3 cubic feet, or 5,184 cubic inches, then dimensional weight does not apply, at least for now. Given the amount of additional revenue that can be generated through dimensional weights, as witnessed with the change from the 194 to 166 divisor in domestic air noted above, and the low profile manner on the part of the carriers in implementing these changes at the time in 2011 — particularly given the impact on overall shipping costs — underscores the importance of understanding your true dimensional weight costs and its overall impact on your bottom line. The rules can change again at any time, and with little fanfare. Some observers have estimated that the 2007 addition of dimensional weight for ground, even with the currently held exception of 5,184 inches, resulted in $195 million in additional costs to shippers and resulting revenues for FedEx and UPS.
So what can you do? First, look at your product and packaging densities. Can you reduce the footprint of your packaging, or even your items themselves without losing product integrity? By performing a detailed audit of all your products, both the packaging and your commodities, you might be surprised where you can save and just how much. Another option is to use regional carriers, who do not often apply a dimensional rule. In addition, to avoid unexpected dimensional weight back charges on shipments by the carriers, implement a regulated standard for keeping track of both actual shipping weights and box sizes used for shipping each order. Tighter management on your shipping lines, ensuring that the anticipated box sizes are always used, can save you significant amounts of otherwise unknown and hard to manage post-shipment costs.
Shipping can be complicated in a world that also includes international shipments, regional carriers, freight forwarders, LTL (less than truckload), FTL (full truckload), and more. By being aware of your service level options, guaranteed time in transit commitments, and having a better understanding your dimensional weights, you can overcome the complexity. Furthermore, with the advent of web services and the increasingly robust APIs available from the carriers, there are an increasing number of SaaS — software as a service — companies that help automate and navigate these complex waters.