Getting Packaging Costs Down to Size
Shippers find nested savings by eliminating packaging waste.
It's a wrap for bulky, wasteful packaging. Shippers today have to satisfy consumers who not only demand that fewer materials be used in packaging, but also prefer those materials to have a low environmental impact.
In addition to eliminating packaging waste to satisfy consumers, shippers also need to consider cost. Cutting back on packaging can reduce both material spend and shipping costs. Making packages smaller and lighter helps companies streamline the supply chain for additional time and money savings.
Forty-two percent of Americans are willing to pay more for sustainable paper products and packaging, and 56 percent want to see more sustainability labeling on products, according to a study by Asia Pulp & Paper.
This trend is especially pronounced among millennials, who "take the time to do homework into company supply chains, and understand products that are sustainable," says Ian Lifshitz, North American director of sustainability and stakeholder relations for Asia Pulp & Paper. "They're applying that knowledge to packing material and packaging choices." In response, companies are rummaging through their supply chains to understand where their materials come from.
In the past, companies that wanted to be sustainable considered recycled materials for their boxes and packaging, says Lifshitz. Since 2010, though, they have shifted that focus toward buying wood for paper and pulp from sustainable forests that can be planted and re-grown within five to six years. The Sustainable Forestry Initiative (SFI), a non-profit organization dedicated to promoting sustainable forest management, now works with more than 1,000 companies. Additionally, more than 25 million acres of land in the United States and Canada are certified to the SFI Forest Management Standard.
"Ultimately, brands can take advantage of a whiter and brighter sheet of virgin paper and still feel comfortable because it's produced from a managed sustainable forest," Lifshitz says.
"For the past several years, both shippers and consumers have focused on sustainability," says Jorge Izquierdo, vice president of market development for the Association for Packaging and Processing Technologies (PMMI). "Part of that interest is in being environmentally friendly, but it's also the need to keep an eye on profits." New packaging tries to accomplish both goals.
Shippers are also getting more creative with packaging, says Jeff Lau, chief operating officer of TPS Logistics, a logistics management company based in Troy, Mich. Since 2014, his company has seen the use of a variety of filler material, including recycled paper and newspapers. High-end retailers and cosmetics companies are turning to bamboo and wheat straw. "These are the companies that are conscientious of their footprint," he says.
One innovator in alternative packaging is global technology firm Dell. In 2009, the company replaced its plastic packing materials with bamboo. In 2013, Dell started using wheat straw in cardboard boxes to ship notebook computers originating in China. The country traditionally treated wheat straw as a byproduct of wheat harvesting and burned it. Dell estimates that it currently uses 200 tons of wheat straw annually, preventing 180 tons of CO2 emissions from being released into the atmosphere. In addition, Dell has been experimenting with mushroom-based server cushioning since 2013. It expects to re-introduce the material in 2016.
In 2014, FedEx and UPS switched to dimensional weight pricing, which determines shipping costs based on both package weight and size instead of just weight. This initiative further drove companies to cut down on packaging sizes and waste, and has led to innovative processes to do both.
Some companies are addressing this by customizing packaging per product or order. One company providing that service is Battle Creek, Mich.-based Box On Demand, which ships material directly to the manufacturer and lets users either input desired dimensions or scan the item to be shipped to determine a box size using a machine that makes one of 400 types of boxes. The system reduces packing material inside the box, cuts down the materials used to make the box, and saves on shipping because the box is smaller and lighter than if it were packed with filler to make the item fit the space.
Filling the Void
Charlotte, N.C.-based packaging company Sealed Air also offers customized packaging. Its I-Pack Automated Void Reduction System folds down the height of a box if it's too high for the products packaged inside. This process not only reduces overall volume to cut shipping costs, but it also decreases the need for packing material inside the box.
Customizing boxes isn't necessarily the fastest packing process, but its benefits offset the additional time, says Izquierdo. This approach not only saves on packaging material that would need to fill the void in a box that's too big, but it also makes shipping the item less expensive because it's in a smaller container.
Flexible packaging cuts down on wasted space, not only in boxes, but also in other packaging options, such as pouches and plastic bags, especially for food and personal care products. "That's also putting less packaging into the environment," Izquierdo notes.
Making packaging smaller can also help cut down on supply chain inefficiencies, says Dr. Patricia Kimball, an advisory team member for UL Environment, which works to advance global sustainability by supporting the growth and development of environmentally preferable products, services, and organizations. "If the box is small, it will cube out better when it's transported long distances," she says.
Since 2010, the main driver of engineering in the packing industry has been "designing the inlays that maximized all the space within the container," Lau says. "Determining how the products lay on top of each other has taken out every possible cubic inch of dead space." He has also seen more direct-to-store shipments, which eliminates a segment of the supply chain. This has led to fewer damage claims from shippers, another significant cost savings.
Still, striking the balance between too much and too little packaging has not yet been achieved. Some companies have added back some packaging so that the product can "withstand the supply chain," Izquierdo says. "We're now going back to using more corrugated cardboard because our primary packaging material is more flexible.
"For that reason, we need to reinforce the secondary packaging. The industry is trying to reach a balance between thinning the primary packaging and thinning the secondary packaging," he adds.
In some ways, shippers have gotten packaging down to its smallest parts, at least from a logistical standpoint. The next step involves getting creative with new materials to be more sustainable.
"Beyond companies making things smaller and lighter, now they're trying to tackle increasing the content that reduces pressure on natural resources," Kimball says. In other words, they're looking toward renewable, non-petroleum-based materials.
Consumers are driving the demand for bioplastic packaging, according to An Economic Impact Analysis of the U.S. Biobased Products Industry, a June 2015 joint publication of the Duke Center for Sustainability & Commerce and the Supply Chain Resource Cooperative at North Carolina State University. The negative impact of creating petroleum-based plastics, combined with high carbon emissions associated with production and the fact that they don't degrade quickly, has forecasters expecting industry revenue for bioplastics to increase by 3.6 percent per year.
In June 2015, the Coca-Cola Company unveiled a 100-percent polyethylene terephthalate (PET) bottle that is both fully recyclable and made entirely from plant-based materials.
Things aren't perfect just yet. "We all have those experiences when we can't open a clam shell package," says Kimball, and we still receive shipments of a box within a box within a box. "We're not there yet in terms of lighter and smaller," he adds.
One sector that's still catching up in trying to match small, sustainable packaging with increasingly smaller consumer products is electronics. "There's a paradox between the consumer conscience and technology," Lau says. "Products get smaller, yet packaging hasn't gotten more creative."
He provides the example of a box for an iPad. It's a thin machine, yet the box still feels substantial. "The question is, how do you break the paradox of customers wanting to put their hands on a meaty product because they're spending a lot of money on it, but technology drives it to be smaller?"
But momentum is in sustainability's favor. Large companies will continue to lead the initiative, Kimball says. Unilever, for example, created a Sustainable Living Plan that includes halving its environmental footprint by 2020. Walmart set a goal of achieving zero waste. Dell plans to divert 90 percent of all waste by 2020. More than 200 companies, including 3M, Amcor, Disney Consumer Products, Dow Chemical Company, Microsoft, Nike, Procter & Gamble, and Verizon Wireless have joined the Sustainable Packaging Coalition, so the push to make packaging more sustainable isn't going away anytime soon.
"Design for sustainability is the ultimate goal," says Kimball. "Not just in products, but in packaging. What's the entire impact of that package—the selection of the raw materials all the way through the potential end of life of the product?"
"Manufacturers can only do so much in terms of lighter and smaller packages because they also have to protect the integrity of the product," Kimball explains. "Companies now have to get a little more creative to try to achieve their packaging goals."