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New Cartonization Technology Reduces Shipping Costs

Via Logistics ViewpointsShippers surprised by unexpected dimensional weight fees

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The growth of eCommerce has put a premium on parcel carrier capacity. In response, UPS and FedEx have continued to lower the bar for when they will apply dimensional weight rating to cartons, which means more shippers will pay more for cartons that are light relative to their size. In response, shippers are looking for new ways to more efficiently and cost-effectively manage carton packing to either avoid or eliminate unexpected dim fees on their carrier invoices. The latest generation of cartonization technology uses advanced algorithms that take several factors into account when determining optimum packing results, including transportation costs. This helps businesses more accurately estimate shipping costs and control packing during the fulfillment process.

How dim weight rating works

Dimensional weight rating determines shipping costs based on weight, distance, and carton dimensions. Dim weights are calculated by multiplying the length, width, and height of a package, and then dividing that result by a special number, called a “dimensional weight divisor” or “dim factor”. The shipping cost is priced according to the higher of either the dim weight or the actual weight. FedEx and UPS recently reduced the standard dim factor for 2017 from 166 to 139, making it more likely than ever that more shipments will be subject to dim weight rating.

Traditional cartonization methods don’t take shipping costs into account

Cartonization software has been around for many years, but until recently most haven’t taken transportation fee structures and other costs into account when determining the best way of packing an order. Traditional cartonization technologies rely on historical data, accessing database records to apply volumetric packing rules based on what will fit into a container. With eCommerce merchants struggling to cope with the cost of “free shipping”, failure to take transportation costs into account within order entry or shopping carts can result in shopping cart abandonment if costs are estimated too high, or margin reduction if cost estimates are too low.

Next gen cartonization uses algorithms to optimize cost savings

Modern cartonization engines use algorithms to determine how SKUs will fit together in virtual space, and factor in weight as a 4th dimension (4D). Rather than considering only “will it fit”, 4D cartonization methods focus on “what is the least expensive way to pack”, based on carrier dimensional rate factors, zone picking labor costs, flexible rule sets, and other real-world factors.

In addition, 4D cartonization technologies are available as a web service that can be accessed on-demand and applied across the enterprise. Purchasing, order management systems, and shopping carts can instantly estimate more accurate shipping costs based on order SKUs weights and dimensions, carton sizes, and other factors. Fulfillment can ensure cartons are packed in the most cost-effective manner. And shipping systems can validate that orders have been packed accurately based on dimensioning scale inputs. Without these controls in place, transportation costs can seriously impact margins.

Conclusion

New cartonization technologies take the guesswork out of packing. “Rules of thumb” are not enough to protect the bottom line. With dim weight rating impacting the bottom line of every shipper, having a consistent, systematic way of managing packing and transportation costs has never been more important.

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