What is a DIM Factor?

July 5, 2010

Every shipping department and mailroom needs a measuring tape and a scale. The reason is that in order to calculate the correct postage or shipping charges, you have to know the DIM factor.

A DIM Factor is an acronym for Dimensional Weight Factor. It is a mathematical factor for calculating the dimensional weight of a package. UPS, FedEx, DHL, the US Post Office, and some regional carriers use dimensions as a factor in determining the cost to send a package. For example, the USPS has a DIM factor of 1 cubic foot or 12″ x 12″ x 12″. If a package exceeds a cubic foot in volume, instead of the weight of the package, they use the volume of the package to rate it.

Here are the steps for a 12 ” x 12″ x 13″ package:

  1. Multiply 12 x 12 x 13 = 1,872.
  2. Next, divide the total by 194. 1,872/194=9.65.
  3. Round up the result to the next whole number to get the dimensional weight of the package. 9.65 = 10 pounds.
  4. If the dimension exceeds the actual weight, you would use this number to calculate the shipping charges. So, in this case, even if you had a 5 pound box, (which is what happened to me) you will be charged for a 10 pound box.

For more information on how USPS calculates dimensional rate, click http://www.usps.com/prices/USPS_prices_dw_pop.html

For UPS, click http://www.ups.com/content/us/en/resources/prepare/dim_weight.html#How+To+Measure+the+Cubic+Size+of+Your+Package

For the FedEx dimensional weight calculator, click http://fedex.com/be/tools/dimweight.html

For the DHL dimensional weight calculator, click http://www.dhl-usa.com/IntlSvcs/dimweight/dimweight.asp?nav=Inttools/DimWeiCal

The USPS has a different factor than UPS and FedEx for domestic packages. You should compare rates between carriers based on package dimensions. For USPS, if the result exceeds 1,728 inches, you must use the dimensional weight. For UPS and FedEx, if the result exceeds 5,184 inches, you pay the dimensional weight.

Domestic is different than International. Here are the current factors:

  • Domestic you divide by 194
  • International you divide by 166

Nobody Beats My Shipping Rates

February 27, 2010

“I have got the best UPS rates in Manhattan.”

“My FedEx rates are better than anyone in my industry.”

“Nobody can get better DHL international rates than I can.”

“The Vice President of FedEx came to our warehouse and said he couldn’t compete with the rates we are getting from UPS.”

“I saw General Motor’s rates and ours were better.”

“I hired a professional parcel negotiator and he couldn’t do any better. In fact, he asked me if I would negotiate rates for his customers.”

“My UPS rates are better than the Federal Government.”

The above statements are ones that I have heard. The people stating them honestly believe them. Do you?

I don’t.

Over the past 30+ years in this industry, I have made friends with many former FedEx and UPS sales people, pricing managers, and executives.

Here is a secret.

The carrier sales people are trained in negotiation strategies and one tactic is to get you to believe that you already have the best rates.

I found an interesting site where I learned about various negotiation tactics, one of them is called Flattery.

This tactic involves making you look good by telling you how clever and intelligent you are. For example, what a great negotiator you are. It makes you feel good about yourself and puts you in a position where you will want to be a friend with them.

I have heard those lines too.

“My UPS rep is my friend; I couldn’t possibly ask him for more.”

“My FedEx rep is the greatest and really went to bat for me.”

You may indeed be friends with your carrier representatives but are you really getting the best rates possible?

How do you know?

Are you 100% confident that you couldn’t do any better?

And, if you could, let’s say even reduce your shipping costs by 10%, what impact would that have on your organization?

Could you compete more effectively?

Increase profits?

UPS did last quarter; they tripled to their profits and reported a fourth-quarter net income of $757 million dollars.

How did you do in comparison?

If You Ship Items Worth Over $100; This Secret Can Save You Big!

January 31, 2010

Do you ship items worth over $100?

What happens if that item is not delivered and your customer complains?

If you are an Amazon seller, you are bound by Amazon.com’s A-to-Z Guarantee and the money is automatically refunded to the customer. Most likely, you will refund the customer or ship another item, but you lose your profit and bear the costs of your product and the shipping costs.

The US Post Office, UPS, FedEx, and DHL all offer various forms of insurance if your package is lost or damaged. With these carriers a shipment is automatically protected up to $100 for loss or damage, but if you require more protection than you need to declare a higher value for protection. FedEx and UPS call it “Declared Value”. DHL calls theirs “Shipment Value Protection. The US Post Office offers insurance as well.

The formula works pretty much the same even though the rates are different if you have a retail or commercial account.

For example, for customers with Retail Rates, UPS charges $0.90 for each $100.00 (or portion of $100.00) of the total value declared, with a minimum charge of $1.80. If you had a package that was worth $500, you would subtract the $100 that is included and have $400 or 4 units x $0.90 for a cost of $3.60.

If you shipped 10 packages a month of this value, you would be paying $36 just for insurance!

FedEx charges $.70 per $100 of value with a minimum charge of $2.10.

The USPS starts with the first dollar that you declare, has a minimum of $1.75. For $100 package, the cost is $2.25.

Now here is a secret that many eBay sellers and online merchants don’t know. There are third party insurance companies that will insure your packages for 50% less than the carriers charge.

Here are the rates from one third-party insurance provider: (Full Disclosure—I would receive a small referral fee if you use this service)

  • UPS/FedEx Ground $.30 per $100
  • USPS Priority Mail with Delivery Confirmation $.50 per $100

This is a HUGE savings. For a $200 package with FedEx, the cost would be $.60 instead of $2.10—a savings of 71%!

For USPS, that $100 package is only $.50 instead of $2.25, a savings of 78%!

16 Types of Warehouses that Ship Small Parcels with UPS, FedEx, and Other Carriers

September 19, 2009

Warehouses that ship small parcels are different than the other types of shippers that I have discussed so far. They ship a much higher volume of packages, from hundreds to thousands of parcels a day. They can be manufacturers, distributors, or third-party logistics companies (3PL). A 3PL is a company that provides outsourced logistics services (more about 3PL’s in a future post).

Small parcels are packages that weigh less than 150 pounds and are typically shipped with UPS, FedEx, DHL, Regional Carriers ( Lone Star Overnight, Eastern Connection, OnTrac,), and the US Post Office. Parcel shippers may also be Less-Than-Truckload (LTL) shippers or full truckload shippers. The way parcels are processed is very different than LTL shipments. Each parcel has a separate tracking number and label. A LTL shipment is usually a pallet with many boxes and shrink-wrapped. The pallet is shipped as a single unit.

Companies that ship small packages send them directly to consumers (business to consumer or B2C) or to businesses (B2B).

Examples of B2C shippers include the following:

  • books (Amazon.com)
  • apparel and accessories(LandsEnd, Zappos)
  • gift baskets and mail order (Harry and David)
  • sporting goods (Callaway, TaylorMade)
  • electronics (Best Buy)
  • medical supplies (Liberty Medical)
  • computers (Dell, Apple)
  • drugs, vitamins (CVS,GNC)

Examples of B2B include the following:

  • industrial supplies (Grainger)
  • pharmaceuticals (Merk)
  • automotive supplies (Michelin)
  • office supplies (Staples)
  • fasteners, bolts, rivets (Fastenal)
  • electrical components (Westinghouse, Allied)
  • industrial valves (Asco, Kingston)
  • industrial chemicals (Dow, BASF)

Because of the sheer volume of packages that a typical warehouse sends, these shippers tend to be very sophisticated. Throughput and accuracy are the most important attributes that they look for in processing. Features that warehouse shippers look for include the following:

  • Speed
  • Multiple user processing
  • Integration with Enterprise Resource Planning (ERP) or Warehouse Management Systems (WMS)
  • Business rules
  • Error checking
  • Mode optimization
  • Integration with material handling systems, such as conveyors, scales, label printers
  • International processing capabilities
  • Reports

I will be discussing many of these software features in future posts, so stay tuned.

7 Best Practices for Saving Money on Shipping in the Mailroom

September 9, 2009

Corporate mailrooms are not only responsible for incoming and outgoing mail, but FedEx, UPS, USPS, DHL, and couriers. Shipping is very different in a mail center than it is in a warehouse. Shipping managers ship products in cartons or on pallets and the charges are passed on to the customers, so, generally, they don’t worry about budgets. Managers of mailing operations are often frustrated regarding their capacity to control the budget for shipping and mailing expenditures. They are often asked, especially in these economic times, to reduce costs; yet the people that make decisions about how to send an express envelope or choose the service level are not under their control. One of my readers is John Sikorski of Princeton University; he shared 7 of his best practices to save money on shipping in the mailroom. Thank you John!

  1. Education the staff in departments to know which way packages should be sent by holding a shipping seminar for anybody who deals with shipping out packages.
  2. Every time that the university signs a contract with the vendors we do a cost study to see the difference in prices between FedEx, UPS and the USPS.
  3. Establish a cost calculator where staff can go to see which vendor cost less.  We have done this for Federal Express and UPS.  The cost calculator has options that will be true for most of the departments most of time such as Next Day Morning and Afternoon, Second Day Service and Ground Service.  We do mostly commercial address and domestic packages so the shipping calculator is only for the United States.  Within the cost calculator we also put the fuel surcharge that one of the vendors charges the university.
  4. Talk to the vendors to see if there is any new programs that could save money for the university such as flat boxes or envelopes.
  5. Keep informed most vendors have newsletters that are free by e-mail.  I also look for magazine that you can get online they will give you some ideas from other companies and universities.
  6. Join the Postal Customer Council in your area and attend some of meetings that they have during the year to keep up with the changes that occur within the postal service and also networking with the other members at the PCC meet.
  7. Combine all shipments that are going to the same university or college when using UPS in order to save on the shipping cost.

Law Firms Ship with UPS and FedEx Differently: 5 Things You Should Know

August 31, 2009

Law offices ship differently. While all 10 of the ways offices can save on UPS and FedEx that I mentioned in my last post are valid for law firms, there are some differences. Law firms mostly ship documents but may also ship boxes filled with files. Here are some of the unique differences:

  • The most significant requirement that all law firms have is the capability to track and bill back clients for shipping. This means that every item must have a valid cost center code for a specific client and the case number. Law firms may be working on more than one case for a client and accuracy is paramount. If a matter is not tracked, then the firm bears the expense and it affects profitability. If an item is accidently charged to the wrong client, it can be a major problem. Not only do they look bad, but it takes an administrative effort to clean up the mistake and they probably end up eating the shipping charges. A system that validates that the correct client number and legal matter has been entered can eliminate mistakes.
  • Legal firms can ship locally, throughout the United States, and internationally. They need to have the ability to track couriers, local delivery companies, regional carriers, and messenger services as well as UPS, FedEx, DHL, and the US Post Office. Since some legal matters require a signature or proof of delivery, they need to be able to ship with Delivery Confirmation, Registered Mail and Certified Mail.
  • Large law firms typically have more than one office. The capacity to have an enterprise shipping technology that ties together all the offices is advantageous. This will allow any shipment for any carrier from any office for any client to be properly accounted for and billed back to the client.
  • Many law firms have outsourced or hired a third party to manage their mailrooms. They typically have “free” systems from the carriers and use a separate system for FedEx, UPS, DHL, and the US Post Office. The ability to use one multi-carrier system that has all the history and tracking in one location for all the offices minimizes time searching for information and makes it easier to consolidate reporting. This provides full visibility into the document chain-of-custody.
  • Most law firms have a customer relationship management system (CRM) or Microsoft Outlook where they store the contact information for their clients. The capacity to integrate these systems so that the address data does not have to be retyped saves time and eliminates mistakes.

Ten Software Features for Internet Retailers Shipping UPS, USPS and FedEx

August 8, 2009

The fifth category of parcel shippers is an Internet Retailer. This could be a SOHO with a website that markets products over the internet or a power seller on eBay. It could also be a retail store that also markets their products online. The difference here is volume. Internet Retailers ship every day. Volumes can range from a dozen packages to a hundred plus parcels a day. Technology becomes critical to making their lives easier. They utilize programs like Blackthorne Pro, Auctiva, and Channel Advisor to automate their auctions, images, orders, and fulfillment. When it comes to shipping, technology that can increase productivity is important. The following are features and functionality that appeals to Internet Retailers:

  1. Internet Retailers want shipping functionality integrated with the software that they use to process orders. They don’t want to have to type or cut and paste shipping addresses from one software program into another.
  2. The ideal shipping technology provides the most cost effective service and carrier for each package. This can be accomplished through business rules or comparing prices based on delivery requirements.
  3. The capacity to ship with multiple carriers. These shippers realize that no carrier is the least expensive in all categories. They want to be able to ship with several carriers. They need to print USPS First Class, Priority Mail and Media Mail labels with Delivery Confirmation. They want PC Postage capabilities and also need to be able to ship packages via UPS, DHL, and FedEx.
  4. Technology that can cut costs and eliminate errors is valued such as features like address validation and checking whether or not an address is a residence or business that can reduce accessorial charges.
  5. The ability to ship parcels to international locations is essential.
  6. Batch processing is indispensable. Internet Retailers want to be able to produce shipping labels in mass rather than one at a time.
  7. The capacity to have multiple users is significant; this is the first category that may have employees to help in the shipping process.
  8. Tracking of packages is important to this segment; they are committed to customer service and want to easily respond to customer inquiries; they want to know when a package was delivered.
  9. Internet Retailers also want to pro-actively notify their customers when a package has shipped, the carrier, and the tracking number. They want shipping software that can send an email automatically to a customer with all the details.
  10. Finally, the Internet Retailer wants reports on shipping volume, average weight per package, average cost per package, dollars spent for each service and carrier, and so forth.