Dimensional Weight Pricing for Carrier Industry
Many companies were forced to cut back and this presented a dilemma, as the green way is not always the cheapest way.
The transport industry has been hit hard by the economic crisis. Fuel prices continue to rise while the volume of packages being sent has decreased. At the same time, carrier companies find themselves in an environmental predicament. There is increasing pressure to find solutions that will help to offset their high level of emissions. The question is whether it is possible to be green and still save money. A straightforward way for transport companies to cut down emissions is to reduce the number of vehicles in the road or sky.
This can be achieved through optimisation of space. By knowing the exact dimensions of the parcels and pallets you transport, you are better able to fill a vehicle to its full capacity. What is more, by including the dimensions in the price, you will be paid according to the actual space an item occupies rather than just its weight, increasing your revenue. Typically a truck is designed to hold three pallets sideways. However, if one pallet is overloaded with boxes or if there are objects sticking out, there will not be enough room in the truck for the third pallet, and a second truck will be required.
Dimensional weight pricing allows carriers to charge for this waste of space. The customer will be invoiced based on the actual size his pallet takes up, compensating for unused space. By knowing the exact dimensions of each item, the carrier will know what type of objects can be used to fill up the extra space. A dimensional weight pricing structure means that customers of large, lightweight items are invoiced according to the relatively large amount of space their shipment requires. It is therefore in the interest of your customers to condense consignments as much as possible.
It is typical that deliveries arrive in boxes that are too big; fragile goods may be wrapped in excessive bubble wrap and frequently outer cartons are filled mostly with air. Being somewhat penalised for such items will encourage denser packing and reduced use of packaging materials. Carriers will not then be accused of 'moving air', which is not cost-effective and has a negative impact on the environment. Denser packing also means less movement of goods within the boxes, reducing the risk of damage during handling.
When taking both volume and weight into consideration for invoicing, a price-based on volumetric weight may be much higher than one calculated on weight alone. Imagine your customer is a shipper of popcorn. Un-popped popcorn kernels are heavier than popped popcorn. If you were to ship five kilos of un-popped popcorn and five kilos of popped popcorn, the two shipments would need very differently sized boxes. As you can see, the dimensional weight of the popped popcorn is much greater than its actual weight.
By charging for dimensional weight, you get paid for the space it takes up in your vehicle. Your customer may then be motivated to send the popcorn un-popped, reducing the volume of his shipment and freeing up space in your truck, or eliminating the need for an extra truck. We are constantly being asked to evaluate the environmental impact of our actions.
While the challenges faced by the transport industry in this regard do not end here, by switching to automatic dimensioning, you are increasing efficiency while doing your bit to reduce emissions. An automatic dimensioning solution is an investment you can make to increase revenue, while keeping your conscience clear. Mettler Toledo can offer advice on optimising space in the transport industry.
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