Once the merged chests get above a certain size the display of it looks wrong. The display of the resultant chest looks like a fence around a empty yard. A 7x7 group does this and anything higher. A 7x4 seems to display okay.
If both width and height of merged chests are above "Warehouse threshold" mod setting the trashdump variant will be used (default is 6). If you don't want to use trashdumps at all, increase this mod setting above your maximum size of chest you are going to merge.