Dimensional Weight & its Role
For decades, shipping costs have historically been calculated based on gross weight in kilograms or pounds. However, when we continue to charge by weight for large-sized yet “lightweight” or “low-density” packages, the whole affair becomes unprofitable for Freight Carriers due to the amount of space the packages take up in the truck/aircraft/ship in proportion to their actual weight.
Now to give you a visual example, as shown in Scenario 1, try imagining a package full of pillows. The weight of the package itself is pretty light. However, because of the space it can occupy, the truck capacity could be quickly filled up with those packages.
Now, as shown in Scenario 2, consider the same truck being filled up with packages containing step ladders. These are large-sized packages that are on the heavier side in weight. It would be easy for anyone here to guess that the Shipment in Scenario 1 has very less actual weight and is comparatively non-profitable for the Freight Carrier.
What is “Dimensional Weight”? How does it stop penalizing Freight Forwarders?
The concept of “Dimensional Weight” has been adopted by the Transportation Industry Worldwide as a uniform means of establishing a minimum charge for the cubic space a package occupies. Dimensional Weight, also referred to as Volumetric Weight, is a pricing technique for commercial freight transport (including Costal and Postal services), which uses an estimated weight that is calculated based on the parameters such as Length, Width and Height.
In Simple terms, it is the weight of a package based on its “size” rather than “Actual weight”.
Dimensional Weight is calculated considering the Volume and using “Dimensional Factor” as the divisor. The resultant measurement is used to determine the package volume.
Is “Dimensional Weight” always used to arrive at the Shipping Cost?
We have a concept of Chargeable Weight, If the “Actual weight” of the Entire Package is higher than the calculated “Dimensional Weight” of the Package, than the Actual Weight is used as the Chargeable Weight and used in-order to arrive at the pricing.
We have two types of Dimensional Weight Calculation:
- which is measured in Inches and Pounds
- is represented in cubic inches per pound (in^3/lb)
- used by US based shipping companies
- which is measured in centimetres and Kilogram
- is represented in cubic centimetres per kilogram (cm^3/kg)
- used by shipping companies In Rest of the World
Dimensional Weight in SAP TM
Depending on the segments such as Air, Ground etc., there are multiple Dimensional Weight Profiles in both Imperial and Metric.
The Dimensional Weight Profile can be maintained in SAP-TM in the Calculation Profile level, at the agreement level as well as the Agreement line item level. The priority of which Profile the System uses is shown in the table below:
How can Krypt help?
Are you looking for implementation of an altogether new solution or wish to automate your shipment process to help save shipping cost and improve on space usage? We offer Rapid Deployment Solution for SAP Transportation Management, tailored to meet your business needs – up & running within few weeks.
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