Dimensional weight and TM charge calculation

SAP S/4HANA Supply Chain for Transportation Management (TM) provides a new generation of functionalities that allows users to manage all their transportation requirements on a single global platform from end to end. The last two blogs (Integrated MM subcontracting and integrated SD consignment process) focused mostly on integrated transportation scenarios. However, this blog focuses on core transportation process during charge calculation which plays a major role in freight settlement process.  

A short overview of freight settlement process is detailed in Blog 3 (https://community.sap.com/t5/supply-chain-management-blogs-by-members/blog-series-sap-s-4-hana-suppl…)   which focused on freight settlement and event driven charge calculation. The accuracy of charges calculated is important in freight settlement process and a good TMS should be able to handle most of the calculation techniques used by various carriers. One such calculation method the use dimensional weight of the product that is transported.

Introduction: Dimensional weight

In scenarios where the entire truck/equipment is not hired to ship the products, shipping/freight costs have historically been calculated based on gross weight in kilograms or pounds. (LTL/Parcel scenarios). By charging only by weight, lightweight/low-density packages become unprofitable for freight carriers due to the amount of space they take up in the truck/aircraft/shipping container in proportion to their actual weight.