If you’re an eCommerce business, you know there’s no flat rate shipping or packaging rates. Each shipping carrier will have different rates depending on many factors, but one of the most significant contributors to your shipping cost is how you pack your items.
A couple of years ago, shipping costs were calculated simply based on the dimensional weight. This is calculated based on the dimensions of the package and not on the actual weight of the product. This may sound confusing, but let’s take a look at an example. Say you are shipping a box of beans for bean bags. The actual weight of the beans is not that much, but they might take up a lot of space which could have otherwise been used for other heavy-weight items. For a shipping carrier like FedEx or UPS, increasing the number of packages shipped or transported in a truck or flight is essential to improve profitability.
Examples such as this is why you have to be careful with your shipping packaging because you can get charged extremely high for your packaging, even if the actual weight is low.
Differentiation Between The Three Kinds of Weight
There are three main types of weight in the eCommerce logistics industry.
If you have a package weighing around 12.7 lbs, the actual weight calculated will be rounded to the following number (i.e. 13 lbs). The actual weight includes all dunnage, from bubble wrap, packaging papers, or packaging peanuts. If your shipping partner is calculating actual weight, the package size does not matter. Even though most shipping carriers do not take this approach, a few still calculate the deadweight (actual weight) for shipping.
Dimensional weight (in lbs) is calculated by the package density, or how much space your package takes up in a shipment. You measure your package (in inches), round it up to the nearest whole number, and then multiply together to get the total weight that is chargeable for shipping.
Typically, the formula for dimensional weight is: Dimensional Weight = (LxWxH)/139 For some cases, such as for UPS when domestic packages are less than or equal to 1,728 in³, the formula for dimensional weight becomes:
Dimensional Weight = (LxWxH)/166
To determine your billable weight, you need to first calculate the actual weight and dimensional weight. Whichever is the higher, that will be your billable weight. There are some things to consider while calculating the billable weight for a large package:
- Irrespective of domestic or international shipping, a large package surcharge might be applied
- No additional handling charge is applied when there’s a large package surcharge applied
How Did Billable Weight Come into Existence?
Calculating actual or dimensional weight alone might not be financially feasible for both the eCommerce business and the shipping carrier. Sometimes the packages would be large, taking up a lot of space and reducing the carrier capacity, but sometimes the packaging was heavier but relatively smaller.
With the rise in eCommerce, the idea of billable weight came into existence. As this came into practice, eCommerce businesses and eCommerce fulfillment centers started looking for ways to optimize the packages and reduce shipping costs. In contrast, the shipping carriers could improve their capacity without compromising on the costs.
How to Reduce the Impact of Billable Weight on Your Shipping Costs
Whether big or small, eCommerce businesses are heavily impacted by billable weight. The shipping costs come up to more than 30% of what is estimated because of how the billable weight is calculated. Especially if you ship lightweight or fragile products frequently, you might end up paying a lot because of how it’s packed to prevent damages. Make sure you follow these steps to minimize the impact of billable weight on your shipping costs.
Negotiate DIM Weight Factor
Suppose you are an eCommerce business with multiple fulfillment centers across the globe and pack and ship a consistent number of products every month. In that case, you might be able to strike a deal with your shipping carrier to create a customized dimensional weight factor. To make this happen, you need to have accurate and efficient demand forecasting and inventory management. For example, if your shipping carrier offers 166 in/lb as their standard rate for you, you can reduce the packaging sizes and utilize the space to your advantage. The higher the DIM factor, the better.
Select the Right Packaging Option
It’s a misconception that you must use boxes to pack and ship your products. If they’re not fragile or easily damageable, you can instead opt for recycled polythene bags, poly mailers, or corrugated paper to pack the products. There are various options for eco-friendly packaging materials. Not every product can be packed this way, so if you’re choosing boxes, always select the ones that are not too big or not too small for the product. Having a large box filled with bubble wrap or paper might convince you that your product is safe, but it’ll also increase your shipping cost by a considerable margin.
Make Use of SIOC Packaging if Available
If you have to carry products from other brands on your eCommerce website, you could use their own packaging to ship. For example, sneakers or Chinaware usually come in their own boxes, and it’s unnecessary to pack and ship them in another package. This will help you save money on shipping costs and packing.
Partner With a 3PL Fulfillment Center Such As ShipBots
When running an eCommerce business, you may have a million things to manage thoroughly. Finding the right packaging option and negotiating with a shipping carrier for affordable rates should be the least of your worries.
At ShipBots, we have multiple packaging options available and enough resources to help you choose the best box size for your products, forecast the demand efficiently, and offer the best shipping rates by partnering with major shipping carriers. We do not hide any additional costs that could add to your total shipping costs and offer complete transparency in our services. Contact us today to learn more about how our weight calculations are done and how you can optimize them to gain maximum benefits.