Part 1: Dimensional Shipping, Residential Charges and Zones
By: Elliott Smith
Trade Tips Blog sat down with Terry Dickey, Operations Manager at International Market Access, Inc. in Ferndale, Washington to talk about e-commerce fulfillment and international shipping, and how new entrepreneurs can avoid the common pitfalls that eat into profits when fulfillment costs aren’t properly understood and planned for. This post will be the first in a multi-part series that explains some of the common fulfillment costs that are often unknown to new e-commerce entrepreneurs developing a fulfillment plan. This post explores three of the most common ‘surprise’ fulfillment costs businesses encounter: Dimensional Weight, Residential Charges and Zones.
Dimensional Weight, also sometime referred to as Dimensional Shipping, is a method of calculating shipping charges based on volume and weight, rather than weight alone. UPS, the US Postal Service (USPS) and FedEx all use Dimensional Weight for some shipments. In general, virtually all air shipments get “dimmed,” or charged dimensional weight while only larger ground shipments receive the charge. UPS, for example, charges dimensional weight on ground shipments only if they measure 16”x16”x16” or larger.
People are often surprised at the significant increase in cost between ground and air shipping because they are unaware of dimensional weight charges, says IMA Operations Manager Terry Dickey. Dickey adds that as a general guideline, “you triple (the cost) when you go from ground to 2-day” shipping. It’s important for companies selling items to consumers online to know about Dimensional Weight, otherwise their fulfillment costs can skyrocket and eat into profits.
Residential Charges are another common pitfall that new entrepreneurs need to avoid when budgeting and planning for order fulfillment. UPS charges an extra fee for delivering to residential addresses. These fees can increase fulfillment costs by $3-4 per shipment. Dickey explains that UPS’ system is geared towards serving business customers, with hubs and routes focused on commercial and industrial cores of cities. Residential addresses are typically further from the hub, and require more time and resources for UPS to serve. Hence, the residential charges are added. The fee can come as a surprise if the box for “residential” isn’t clicked when filling out price quote on the UPS website. It’s important to factor Residential Charges into your company’s fulfillment budget.
UPS divides the United States into zones. Pricing goes up with each zone crossed, so for example, a UPS shipment from Washington state to Florida crossing multiple zones will incur substantially higher cost than a shipment from Washington to Colorado. Understanding how these zones will affect your business and your cost to deliver to your customers is another important item to address when planning your company’s e-commerce fulfillment. The US Postal Service applies zone fees for many shipments as well. However, items under 70 pounds shipped in USPS-provided Priority Mail packaging do not incur a zone fee.
Click here to read Part 2: Choosing the Right Logistics Partners
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