We’ve all been faced with the challenge of moving. Looking around your home at all of your possessions and wondering how you’re going to fit each item into a box and then each box into a U-Haul or your begrudgingly obligated friend’s. The game of real world Tetris when you load and unload personifies the ultimate goal of being as efficient as possible. The same is true for small package delivery, driven mainly by the growth of e-commerce.
In a market where cost savings are at a premium, the online shopping boom is beginning to force distribution centers to rethink their LTL (less than truckload) and small package delivery charges. By nature these orders are less efficient than full truckload shipments. To combat this, new cost structures are being developed. This creates an opportunity for manufacturers and shippers to rethink their packaging and turn an obstacle, potentially an expensive one, into an advantage.
One of the biggest changes is the transition that many carriers are making toward dimensional weight, or “dim weight”. The two main questions we need to answer are:
1.) What is dimensional weight?
2.) How can we make our packing more efficient to minimize the cost of dimensional weight?
Dimensional weight is the practice of charging the higher of two metrics: package weight or package size. Dimensional weight is calculated by multiplying length times width times height and dividing that number by 166 [(LxWxH)÷166]. That number is rounded up to the nearest whole number to provide a package’s dimensional weight. So even if your package isn’t very heavy, if you ship a box of paper clips in a larger than necessary box, you will end up paying more based on the unnecessary height, width and length of the package. The reason for this shift in calculation is that a standard e-commerce package is over 40% air. While this makes shipments very light, a truckload that can hold over 45,000 pounds, can only transport 25,000 pounds of packages due to wasted space.
Improving your packaging is the most direct way to combat these higher shipping costs. The first step would be to set a benchmark and see how efficient your packaging is now. Calculating the new costs of shipping your current packaging will incur can reveal where savings can be found. Instead of shipping a box of pens that weighs 10oz. (charged at 1 lb.) in a box that measures 12” by 10” by 5” and paying a dim weight cost of 4 lbs., consider shipping them in a smaller envelope.
Taking a look at wasted space in your packaging can generate some substantial savings for your order fulfillment. Not only can optimized containers lower operational costs, they can also increase distribution center efficiency. Barrett Distribution Centers creates customized solutions that increase productivity and efficiency throughout the supply chain. For more information, click here.