Is reusable packaging the right fit for your business?

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Every day, millions of shipments are delivered to every corner of the globe. And when they arrive, the cardboard, plastic, Styrofoam and pallets protecting the goods are thrown away, recycled or stored until they eventually reach a landfill. Few certainly feel comfortable with the waste, nor the time it takes to manage it, yet the investment required for reusable packaging is considerable, and often out of reach to midsize and smaller companies. But with a fresh look at new options, and a closer analysis of current transport packaging strategies, it's still possible to make meaningful improvements without undergoing a total supply chain transformation.

The rundown on reusables

Reusable transport packaging (RTP) is everywhere. Better-known in freight logistics, RTP it is typically defined as transport containers made of metal, plastic or wood that are used at least five times, and then some. Over six million shipping containers passed through the Port of Los Angeles alone from January through September, 2016. There are over two-billion pallets in use, and nearly a million Unit Load Devices (ULDs) in service by air freight carriers. And although RTP still holds boxes, crates, pallets and dunnage, there is usually less overall waste than if the contents had been shipped in disposable outer packaging.

[How to provide eco-friendly packaging solutions to your customers]

In parcel transport, however, reusable packaging has yet to catch on in a significant way. For starters, a company's brand and image are at stake. While few care if a ULD slides out of a jet bearing dents, scrapes and random stickers, the same cannot be said of boxes or envelopes arriving at a business or home. The receiver, consciously or not, will be concerned about the condition of the contents and may lose trust in the brand. An equally large hurdle is getting those durable assets returned to their rightful owner so they can be put back into service.

The financial and physical returns

The benefits of reusable packaging can be impressive. In 2015, furniture maker Herman Miller won a Reusable Packaging Association award for an outbound shipping solution that kept an estimated 100 tons of packaging waste out of landfills, and reduced material and freight costs by $500,000. Such eye-popping numbers can however distract from the challenges, such as storage, cleaning, maintenance and returns - no small or inexpensive feats.

"It's easier to make the numbers work for reusable outbound packaging when shipments are sent through a closed transport network [an owned or controlled transportation fleet,]" says Jason Vaughn, Division Manager of UPS Global Distribution Operations. Vaughn adds, "Without a closed-loop method of transport, you'll need a very accurate way to track those assets, whether that's done by you or a third-party. And you'll need a plan for keeping utilization high."

Illustrating Vaughn's point, global machinery and equipment maker John Deere operates a sophisticated tracking and utilization plan for reusable packaging that ships components, parts and service-parts to plants or dealers around the world. In addition to improvements to safety, product integrity and storage efficiency, the company credited 85% of its quantifiable savings to reduction in expendable packaging.

The capital and labor investment required for an RTP program has made "pooling" an attractive option, whereby third-parties own, lease and track the assets on a company's behalf. Companies who more often project a healthy return on the investment are dealing with unique product characteristics, such as high-value or temperature-sensitive goods.

Add's UPS's Vaughn, "Even if the ROI on reusable packaging won't work for your particular business model, there are other ways to find efficiencies. You might look at incorporating reusable totes or bins in a limited in-house application, or you can work with your logistics provider to reevaluate your current outbound packaging."

RTP in the loop

If the loop between you, your suppliers or customers is "closed" in the sense that one of you controls the transportation to and from nearby facilities, reusable packaging may be a great fit. Carmaker Honda piloted a program to enhance the tracking and visibility of the reusable containers that move between its Central Ohio production facility and a large supplier. The goal was less to track individual assets but to ensure the supplier has possession of enough containers to supply parts in a timely and accurate way.

The Association for Manufacturing Engineering (AME) cites other instances in which reusable and returnable packaging are entering the automotive industry. Specifically, top-tier automotive parts supplier Magneti-Marelli began having their vendor put lighting housings on a rolling rack system that moves from the supplier's factory floor to the Magneti-Marelli facility. The result is fewer touches and much less disposable materials.

"One great thing about reusable packaging is that it doesn't have to be an all-or-nothing proposition," says Lea Davis, UPS Packaging Services Manager in Louisville, KY. "There are ways to incorporate elements into a single facility or a certain area of your operations."

Davis suggests looking at areas of an operation where damages or failures are occurring as an opportunity to consider a change. "In some cases the cost of reusables can be easily recouped in higher throughput or order completion rates. And often in a short period of time."

Reduce by rethinking your disposable outbound packaging

When major parcel and freight carriers announced pricing based the dimensional weight of a ground shipment under three cubic feet, many shippers reviewed their outbound packaging and adjusted accordingly. Yet in a survey of parcel and freight shippers conducted by Niagara University and DC Velocity, 27 percent of respondents said they had taken no action in response to dimensional weight pricing.

Quint Marini, UPS Package Engineering Manager suggests that companies may be underestimating the power of package re-engineering. "When we engage with customers to evaluate their packaging, we find that many are sending boxes with up to 60% wasted space, and envelopes with up to 30%. Even a small change over time can have significant impact." Marini points to the collaboration between packaging giant Sealed Air and UPS to provide an enhanced suite of packaging design, testing and performance analysis to UPS customers operating in the e-commerce space.

Says Sealed Air President and CEO Jerome Peribere, "As industries continually strive for increased efficiency and consumer satisfaction, we have the distinct ability to make an impact: on the environment through the elimination of damage and void waste, on cost efficiency by optimizing package dimension, and on customers through an enhanced at-home experience."

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