The LTL industry has been on a path to adopt dimensional, dim-weight, or space-based pricing for some time. As more carriers shift from traditional weight and class-based rates to pricing based on the size of freight and the space it occupies in a truck, shippers will need to adapt their freight operations and budgets.
Just this month, another notable top 10 carrier joined the club using density-based pricing, when they introduced its newest version via a cubic minimum charge program, which supplements weight-based metrics. This company now uses this price guide in most of its shipments and warehouses.
While FedEx and UPS were early adopters of dimensional pricing, more of the nation’s top LTL carriers have slowly followed suit. That adoption speed, however, has increased steadily this year. With the explosion of e-commerce, many LTL and parcel carriers were losing money on shipments of large, light items. Carriers get paid based on what they can load into a trailer, and consequently, the truck frequently runs out of room to hold the heavier freight.
The density-based pricing model was designed to slow this trend. Now there are approximately 390 density-based classifications that supplement the 18 more weight-based NMFTA (National Motor Freight Traffic Association) classifications. The larger carriers and even some shippers have purchased and installed sophisticated dimensioners, which use lasers to accurately measure the dimensions of pallets, packages, and goods.
Does Dimensional Pricing Increase Shipping Costs?
Because shippers now must pay for space on the truck, not just weight, shipping costs can rise depending on the product, weight, and dimensions of what you are shipping. Increases between 10 to 20 percent have been shown. For instance, companies that ship oddly shaped goods like bicycles, treadmills, and stair steppers can expect higher prices. These type of products take up more space in a trailer than a 2,500-pound low-profile pallet of nuts and bolts but weigh much less.
The Era of Dimensional Pricing is Here
As e-commerce and low-density freight continue to proliferate in the marketplace, carriers will continue to adapt their models to make the most effective use of their trailer space. Dimensional pricing is simply another step in the evolution of the industry, leveling the playing field for all stakeholders.