Carton and Packing Optimization for Efficient Shipping
Have you ever ordered a small item online, only to receive a mysteriously large box a couple days later? You wonder what large thing you could possibly have ordered, only to find the small item bouncing around inside the oversized box, perhaps accompanied by some sort of plastic packing material. With a passing thought about the waste of such a large box for a small item, you toss the box and packaging in the trash, relieved that you’ve received what you were expecting.
We’ve all had experiences like this and usually don’t give them too much thought. But now, before tossing any more oversized boxes and plastic packing material away, let’s consider the importance of carton and packing optimization.
For an individual consumer, the costs and waste for a single shipment is relatively small, but for companies that are shipping 100’s or 1,000’s of shipments per day, these costs–and environmental impact quickly add up. You can’t afford to take carton and packing optimization for granted.
Cartonization Business Costs
Even though your packing processes and warehouse staff might not give full consideration to carton and packing optimization, you can be sure that the shipping carriers you use certainly do. This can result in your business having to pay higher shipping costs than what you might expect or at the very least, need to. There are several factors related to packing that can impact the cost of shipping and fulfillment.
Packing Optimization and DIM Weight
Dimensional weight, or DIM weight, is a measurement shipping carriers use to make sure they are using the space inside their delivery vehicles efficiently and appropriately charging for shipping costs. To identify the DIM weight of a package, shipping carriers divide the volume of a box by a special number they call the DIM divisor or DIM factor. The DIM factor can vary by carrier and by service type, but the key consideration for your business is this: If the actual weight of the package is less than the DIM weight, the fee charged by the carrier will use the DIM weight rather than the actual weight. In other words, if you ship a small item in a large box, you could easily pay more for shipping than necessary. In fact, it’s been estimated the average box is typically 40% too large for its contents, and as a result, businesses are overpaying by 25% or more on each shipment they make. Selecting the smallest available box for each shipment will help minimize shipping costs and preserve margins.
Fragility, HAZMAT, Value
Carton and packing optimization must take into account many more factors in addition to DIM weight. For example, when packing a small item in a small parcel or box, you should also consider how well the packaging will protect the item from damage. Optimizing your packing process includes selecting the packing materials that minimize the potential costs of managing and replacing damaged goods. In addition to fragility, your packing process must consider whether the item includes hazardous materials (HAZMAT) such as Lithium-ion batteries to make sure safety standards are met. A further factor can be the value of the item–whether you are shipping a bar of gold or a bar of chocolate of similar size can determine the optimal packing material for the item. These are just some examples that show how selecting the optimal packaging requires consideration not only of DIM weight but various other factors.
Increasing Complexity and Carton Optimization
As complex as this can get for one item, consider the increased complexity when you are packaging and shipping a large number of items to the same destination. The higher the number of items in a shipment, the harder it becomes for packers to select the ideal container to efficiently pack and ship. Even the most experienced packer may overestimate and select a slightly larger box than needed to avoid having to use multiple boxes or needing to repack. This makes sense when trying to meet daily shipment targets, but the right tools can help you optimize carton selection and minimize shipping costs while helping your business meet shipping metrics. A well-designed packing algorithm can quickly and accurately calculate exactly how many items can fit into each container and recommend the fewest number of containers to fulfill a given order; and more how those items should be packed in containers to maximize space utilization. Choosing the right container size means that you don’t overspend on shipping costs, while also considering factors such as fragility, HAZMAT, and shipment value.
Shipping Mode and Packing Optimization
When making decisions about cartonization and packing optimization, you should also consider what will be the best shipping mode: Parcel or Less Than Truckload (LTL). Each mode offers different advantages, but what types of boxes should you build and pack, depending on whether Parcel or LTL would be optimal, and should you then assemble the boxes onto pallets, in the case of larger volume LTL shipments?
Optimization for Environmental Sustainability
Carton and packing optimization is not only important from a business perspective but also from an environmental perspective. With so many oversized boxes being used for shipments, consider the environmental impact of moving inefficiently used space on delivery vehicles. For the case where the typical box is 40% too large for its contents, across the United States, that can translate into 24 million extra truckloads on the road each year. That means 1.75 billion gallons of diesel fuel is wasted, emitting 17 kilograms of carbon dioxide into the atmosphere. Further, with the popularity of eCommerce increasing, it’s been estimated that 30% of the annual amount of solid rubbish in the United States now comes from the packaging of home-delivered goods.
Next Steps
Business profitability and environmental sustainability can be accomplished together by focusing on carton and packing optimization. However, operationalizing this for a fast-growing company that relies on workers to perform manual steps can greatly limit growth. With so many factors to consider, a growing company will require ShipHawk’s advanced Transportation Management System (TMS), including its SmartPacking™ and Dynamic Rules Engine™, to achieve carton and packing optimization. To find out more about how ShipHawk is the best shipping solution for your business, contact us today.