What’s the difference between actual weight, dimensional weight, and billed weight? It seems like a simple question, but the details can have a real impact on your shipping costs.
What is Actual Weight?
Actual weight is pretty self-explanatory. If a box weighs 10 pounds, that is the actual weight of the box.
The dimensions of a given box are irrelevant to actual weight. And in the world of small parcel shipping, specifically with UPS and FedEx, actual weight is the weight that you would see on a scale.
What is Dimensional Weight?
Dimensional weight is a formula that UPS and FedEx use to determine shipping costs.
They multiply the length, width, and height, and they divide that number by what they call a DIM factor. (Right now, the published DIM factor right now is 139.) That accounts for the package’s volume and density.
Let’s say, for example, that you ship a box of feathers. While the actual weight of that package will probably be low, the size of the box will factor into the dimensional weight. If your feathers are in a big box that takes up lots of space, dimensional weight will account for that.
What is Billed Weight?
The billed weight is what the carriers actually use to bill you. They take the greater of actual weight or the dimensional weight and that becomes your billed weight, which you actually see on an invoice.
Here’s an example. Let’s say you have a 12 x 12 x 12 package with an actual weight of 10 pounds. First, the carriers will determine what the dimensional weight of that packages is. If you multiply 12 x 12 x 12, you get 1,584. Divide that by 139, and you get a number just under 13. They'll round that up to 13 pounds in dimensional weight, and you'll get billed for 13 pounds, rather than the actual weight of 10 pounds.
If there's a difference between the actual weight versus the billed weight of your package incident, you're probably being billed at your dimensional weight.
Applying Billed Weight as a Shipping Charge
Shippers who bill back charges based on actual weight without taking dimensional weight into account are likely under-billing for some packages.
In other words, if you only bill for actual weight, your billed weight could be more because the carrier is using the dimensional weight. Again, the carriers take the greater of either actual weight or dimensional weight to come up with billed weight.
What you want, as a shipper, is to bill at your actual weight as much as possible. And the difference between actual weight and billed weight is a great metric to keep your eye on. Because if you’re being billed for dimensional weight, there might be an opportunity for package optimization, such as using smaller dimensions.
We've all opened shipments full of stuffing and air, with a little product in a big box. And if you’re paying for shipping costs, that’s totally unnecessary. In all of those examples, you'll be billed at your dimensional weight, which is greater than the actual weight of that package.
By optimizing your packaging or using smaller packaging, you’re more likely to be billed at your actual weight or billed at a lower dimensional weight. That’s another reason that billed weight is an important metric to track.
One of the key performance indicators (KPIs) that our platform identifies is the difference between actual weight and billed weight. Shippers who are aware of that metric are much more likely to identify potential packaging optimization opportunities.
And if you're using Lojistic or if you create a free demo account, you can see that information on the Transportation Spend perspective within the demo.
Strategies for Optimizing Your Billed Weight
There are a few more strategies, in addition to package optimization, that shippers can implement to mitigate or reduce the potential for DIM factor issues.
First, as a shipper, you want the DIM factor to be higher. And DIM factors are negotiable in carrier agreements.
The carriers have been lowering the DIM factor over the years. It used to be 194, and it dropped to 166 before falling to 139 today. But if you negotiate a higher DIM factor, your dimensional weight will drop.
Let’s say you negotiate a 194 DIM factor, as opposed to a 139, and applied that to the example above. That 12 x 12 x 12 shipment was billed at 13 pounds with a 139 DIM factor, even though the actual weight was 10 pounds. With a 194 DIM factor, the dimensional weight for that same shipment is just nine pounds.
Because the actual weight is greater than nine pounds, you’ll be billed for the actual weight. In short, by increasing the DIM factor, you pay for the actual weight of the shipment, not the dimensional weight.
Negotiating a better DIM factor can also reduce the need to optimize your packaging. You don't have to do as much operationally because you’ve built those savings into your contract.
That said, negotiating a higher DIM factor and optimizing your packaging is the most effective way to truly save on shipping costs. Packaging optimization and negotiating an improved DIM factor is a two-pronged approach that goes hand in hand. Addressing both sides will lead to actual weight billing more frequently than dimensional weight billing.