Back in 2007, most small parcel carriers moved away from a flat Oversize surcharge for larger packages, to a simpler rate calculation based upon dimensional weight. If any of your packages have a large size-to-weight ratio you need to consider the package’s dimensional weight when calculating shipping rates. Not doing so can cost you plenty.
Take a look below at just one of the costly errors we discovered at one of our clients this week:
- Shipped an oversize (L48 x H24 x W24) 21 lbs. package from Dallas, TX to Burlington NC using UPS Ground.
- Shipped it without dimensionally rating it at a cost of $10.72 (Base Charge + Fuel) which they billed their customer.
- The correct dimensional rate was $ 114.78 (Base Charge + Large Charge + Fuel) which appeared on their invoice from UPS.
- Profit on the sale of the item shipped was $ 55.70.
The cost of this error is obvious. Unfortunately for this client, it was not the only occurrence of this type of shipping error. While all carrier-provided and third-party shipping applications dimensionally rate packages, we have found that shipping system operators don’t always take the time to correctly enter the dimensions for packages. As we’ve see in the example above, data omission during a shipping transaction can mean the difference between profit and loss on a customer’s order.
How do you know if you have this problem? Look at your weekly carrier invoices and note if you have dimensional rate billing adjustments. Most small parcel carriers will tell you that best practice is to dimensionally rate every package so that errors like this don’t happen. This can be done by mandating this process and incorporate it into your shipping technology.