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How Dimensioning Equipment Can Prevent Chargebacks

When a carrier charges you for weight or dimension inaccuracy, you’re losing valuable dollars.

Contributed by: MHI’s SLAM Industry Group

The practice of chargebacks from carriers—penalties for inaccuracies—began first in air freight. The carriers switched from asking for weight-based figures from their shipping partners to dimensional-based. This allowed for greater profits and when customers needed to get packages delivered in a hurry, they were more than willing to pay for this premium service. Before long, chargebacks for inaccurate dimensions became standard with air freight.

While ground freight is typically less time sensitive than air, parcel carriers like UPS and FedEx soon followed the model set by air carriers. They recognized that they could charge more using dimensional measurements versus weight, so they made the switch. Like their air carrier peers, ground carriers also embedded a chargeback model for shippers supplying inaccurate information.

“Over the years, ground carriers determined that they were filling up trucks before they had exceeded the weight capacity, so it made sense to sell by dimension, not weight,” explains Randy Neilson, President of Cubiscan. “They often still compare the weight and dimensions of packages and then charge the greater of the two.”

If the potential cost for shipping a parcel is greater based on its dimension, the carrier chooses it, and vice versa. “If you’re shipping a small box of batteries, for instance, it’s dense and small and doesn’t take up much space,” says Neilson. “In that case, they’ll base the fee on weight. If you’re shipping a box of baseball hats, they’ll likely choose dimensions.”

In either case, you want to avoid chargebacks for supplying your carrier with inaccurate information. One of the best ways to do that is to add automated dimensioning equipment to your last 100 yards of operations. Part of the SLAM line up of equipment—shipping, labeling, applying and manifesting—have automated dimensioning that can save you a great deal of money over time.

From manual to automated

Many companies still operate their last 100 feet manually, and that leaves open the possibility of higher error rates. “Any incorrect value, whether length, height, or weight will lead to a chargeback,” says Dennis Andre, Director of Automation at enVista. “Depending on how far off you are and how much you’re shipping, those charges can add up. If you’re a big company sending out hundreds of parcels and getting frequent chargebacks, that number can be significant.”

By adding dimensioning equipment, however, you can dig out of that expensive hole. “It will scan the order, measure its length and height, and weigh it,” Andre says. “It provides accurate, real-time data about what’s going out the door, instead of depending on historical data or a formula.”

This is key, says Sean Webb, Director of Sales and Service for Sparck Technologies, because products change frequently, so current data is the only way to avoid chargebacks. “You need to stay flexible and be able to respond all the time,” he says. “Think of a hose, for instance. It could be 100 ft long and the dimensions might align with its length. But when it’s curled up for parcel shipping, however, its dimension will be different. The carrier will find the discrepancy and charge you the incorrect information.”

There are many varieties and options with dimensioning equipment. They can be ultra-high-speed for companies that churn out a high shipping volume, for instance. Webb says that in a right sizing solution, dimensioning equipment captures the outermost dimensions via a light curtain, and then the system prepares a right-sized box for shipping. “We then seal it, weigh it, and get the dimensions, which prevents chargebacks,” he says.

Put the benefits together, and when you invest in dimensioning equipment, it will pay for itself in short order. “The more packages you ship, the more errors you can incur, and the more savings you can accrue with automation,” Webb says. “It can also save your transportation costs and play into the sustainability conversation because you’re getting more on the truck and not using fill materials for your boxes.”

According to Andre, many companies will reach an ROI within two years. “This is definitely true for large companies, and it’s also achievable if you’re a smaller company,” he explains. “Add in manifesting software, too, and you’ll get the best rates with carriers, which also contributes to your savings.”

Value well into the future

Even as you get accustomed to beating chargebacks from air and ground carriers, it’s important to know that LTL carriers are beginning to add chargebacks to their practices as well. “They’re also finding that they’re running out of space on their trailers and that the old way of charging isn’t paying off for them,” says Neilson. “So, they’re transitioning to using dimensions as well.”

Just as with smaller parcels, LTL carriers recognize the profits to be had for chargebacks and are following suit. With this in mind, your investment in dimensioning equipment stands to save you money for years to come. Now is a good time to investigate the potential solutions available, avoid future chargebacks, and earn a rapid return on your investment.

No matter what size your operations, nor your plans for growth, automating dimensioning tasks makes sense. “You need automated equipment if you want to avoid chargebacks,” says Neilson. “You can’t make a go of it with just a human and tape measure.” WMHS

MHI’s SLAM Industry Group (www.mhi.org/slam) provides education and thought leadership for “the last 100 feet” of warehouse and distribution operations. The group is made up of the companies that make the solutions and technologies that go into ecommerce fulfillment processes.

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