Volumetric weight (also called dimensional weight) is the determination of shipping rates using either volume or weight, depending on which is larger. The shipper determines a volumetric divisor. Package volume is divided by this divisor to give a cutoff weight. If the actual weight is greater, the shipping charge is determined by weight; otherwise, it is determined by volume. This serves to incentivize senders to packaging that is compact enough for the sender to pay by weight instead of volume.
Suppose the volumetric divisor is 5,000. Then volume in cubic centimeters is divided by 5,000 to arrive at a weight in kilograms for the volume if it had a density one-fifth the density of water. This can be seen as follows.
The density of water is 1 g per cubic centimeter. That’s 1 kg per 1,000 cc. So a volume of 1,000 cc divided by 5,000 gives 1/5 kg for 1,000 cc. The volumetric weight is 1/5 kg in this case.
So the cutoff that determines whether to use volume or weight to calculate the shipping rate is a proportion of the density of water. Different shippers use different divisors, though 6,000 is the most common. For a volumetric divisor of 6,000, the density cutoff is one-sixth the density of water. For a volumetric divisor of 5,000, it would be one-fifth the density of water.
The motivation of the shipper is to pack as much into its trucks and planes as possible. Low-density packages run contrary to this goal. The shipper loses money with an airplane carrying only a few packages, so the volumetric weight system gives the shipper an opportunity to collect on the loss of revenue from reduced package count.
The system serves a second purpose: to modify the behavior of those who pack the boxes, encouraging them to pack more densely.
The Break-Even Point
Note that when the volume of a shipping box is reduced enough that the density is greater than the cutoff density (say, one-fifth the density of water), the sender no longer has a motivation to reduce the size of the box. No further reduction will change that the shipping charge is determined by the weight of the package (assuming the packing material has no significant weight). Therefore, the motivation to reduce the packing size only exists up to the cutoff density, but not above it.
Shippers sometimes provide volumetric-weight calculators on their websites, based on their company's selected volumetric divisor. Height, length and depth are entered in, and the volumetric weight is calculated. This is of course no more complicated a calculation than W×H×D/(volumetric divisor).