How Smart Packing can Reduced Your Shipping Costs and Help the Planet
Introducing a brand new series featuring industry insights and ideas from ShipHawk’s very own CEO, Jeremy Bodenhamer. The following is adapted from his book, Adapt or Die.
One of the most crucial questions facing a shipper is: which box? Too big a box uses up unnecessary space, materials, and carrier fees, and too small a box is, well, too small.
Cartonization is the technology used to answer the “which box” question. Fundamentally, it provides more accurate pricing. On-demand packaging, a component of cartonization, also avoids financial leakage and allows better branding to boost sales. Here’s what smart packing and thinking inside the right-size box can do for your shipping business.
Cartonization Means Less Damage to Goods in Transit
Cartonization is a critical component of streamlined warehouse processes with huge benefits. First, cartonization reduces damage during transit, which is one of the top reasons for merchandise returns. Citing a Statista estimate, Shopify analysts state that “in the US alone...return deliveries will cost $550 billion by 2020, 75.2% more than four years prior.”
Research has shown that replacing a damaged product can cost an e-commerce vendor up to 17x more than the original cost to ship. This is just one example of financial leakage in shipping, which is rife. Packing automation like cartonization enables companies to hit the optimization sweet spot between potential damage, packaging costs, and packaging’s impact on shipping costs.
When linked with shipping software that can also algorithmically determine the best carrier for particular dimensional weight charges and delivery commitments, shippers know the most cost-effective shipping method beforehand, allowing retailers to provide accurate shipping quotes at the point of sale and at the point of carrier and service selection.
Boxes on Demand Reduce Labor Costs
One component of cartonization is “on-demand” packaging, or hardware that can make custom boxes on-site specifically for each order’s unique makeup of items. According to Packsize, an on-demand packaging system provider, on-demand packaging avoids the huge fees associated with dimensional (DIM) weights.
Less filler material with on-demand packing cuts box volume by an average of 40 percent, saving valuable warehouse space, reducing the environmental impact, and mitigating the risk of product damage due to box size.
On-demand packaging systems are great for shippers of all sizes, not just because of the direct benefits of their hardware, but also because many have moved the large, upfront costs normally associated with complex hardware and robotics to a variable cost model.
Proper cartonization software, like ShipHawk, when used in conjunction with box-making machines, also reduces the labor required to prepare and pack orders. Smart-packing algorithms rely on sophisticated systems of record. For cartonization purposes, these algorithms must reference inventory data concerning the size, weight, height, width, length, and category of objects.
The software can then calculate the ideal box size based on the item weight, dimensions, and other characteristics (value, fragility or special handling requirements) and communicate this data directly to the box maker instead of relying on a human at a pack station and their trusty tape measure.
Using Recyclables Will Boost the Bottom Line
While you're realizing savings from automation, boxes on demand, and custom packing, why not please your customers too and cement their loyalty? While consumers want cheap, fast shipping options, they also expect packing materials that can be recycled or at least easily disposed of.
The consumer’s desire for recyclability and the company’s desire for packaging efficiency can often be at odds, but they don’t necessarily have to be. As Ben Conwell, retail expert, notes, “When it comes to packaging, what’s good for business is good for the Earth.” As 33 percent of our landfills are filled with packaging materials, cutting back on overpackaging helps companies’ bottom lines as much as it does the environment.
According to Hanko Kiessner, CEO of Packsize, “the average box is 40 percent too large for its contents...If excess volume were reduced, it would eliminate 24 million of the 60 million truckloads of product shipped annually in the United States,” which would, in turn, “save 1.75 billion gallons of diesel, preventing 17 billion kilograms of carbon dioxide from entering the atmosphere.”
Waste Less and Earn More
Many companies are now effectively using sustainable materials inside their shipping cartons. Paper packing, air pillows, and biodegradable packing peanuts that decompose in water, leaving no toxic waste are more prevalent, and the customer loves them.
With cartonization and smart packing, you’ll know which box, you’ll have lower carrier fees, less warehousing and labor costs, happier customers, and a sustainable business that thrives.
To learn more about optimizing your shipping materials, schedule a call to speak to one of our experts.