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Calculating the Total Cost of Protective Packaging

Pantero_Packaging_43933858.2000colorWhen it comes to protective packaging, shippers have a lot of options. And of course, everyone wants to keep packaging costs down. But the total cost of packaging goes beyond simple materials costs. Here are a few other factors that you may not have considered when calculating the cost of protective packaging.

Product Replacement Costs

The first priority in choosing a packaging material is to make sure it delivers the protective functionality you need to prevent damage to your products in transit. The more fragile your products are, and the more expensive they are to replace, the more protection you'll want to give them.

Different types of packaging materials offer different types of protection. These may include:

  • Cushioning products from shocks and vibrations
  • Blocking and bracing to prevent items from shifting in the carton
  • Protecting surfaces from dirt, scratches and scrapes
  • Protecting corners and edges from bending and breaking

If your packaging material does not provide adequate protection, a high ratio of your products may arrive damaged at their destination. Replacement costs for products returned because they were damaged during shipping can easily outweigh any savings that come from choosing a cheaper protective packaging material.

Brand Reputation and Customer Satisfaction

Broken products don't just cost money directly. They also do a lot of indirect damage to your brand and reputation.

Products that arrive broken due to poor packaging create a customer perception that your products are lower quality and your company is unreliable. Customers remember the hassle that results from having to ship back the broken item and wait for a replacement or ask for a refund. If their need was time sensitive, the replacement may arrive too late.

Consumers who receive broken products often take out their frustration in the form of one-star reviews, even if the item is later replaced. Too many unhappy customers can sink a brand over time.

Shipping Costs

The type of protective packaging you choose can have a direct influence on your total shipping costs. A packaging material that allows you to choose a carton with smaller dimensions could deliver big savings on shipping.

For example, UPS and FedEX both use a "dimensional weight" calculation to determine the cost for shipping a package. This calculation uses the length, width and height of the box to determine the "dim weight." Shipping costs will be based on the larger of either the dim weight calculation or the actual weight of the box. This penalizes shippers who have lightweight objects that ship in large boxes. A packaging material that offers superior cushioning or blocking and bracing with less material volume can help shippers reduce shipping carton size and shipping costs.

Carton size matters for freight shipping, too. If you can reduce the size of your cartons, you can fit more product on a pallet. This can make a big different in freight costs, especially for Less-than-Truckload (LTL) shipping.

Labor Costs

How much time does each box take to pack? What are the manual labor costs associated with each completed package?

Some packaging materials are more labor intensive than others. Manual wrapping, paper crumping and box stuffing can be very time consuming compared to other options like air pillows or packaging peanuts. The higher your shipping volumes, the more important labor costs will be in your calculations.

If you are shipping a lot of packages daily, it may make sense to look at protective packaging solutions that can be fully or partially automated. Other solutions, like pre-filled packaging pads, are ready to go out of the box, so they minimize manual packing time.

Floor Space

How much storage space will your packaging materials require? In a busy warehouse or distribution center, floor space costs money!

Different packaging materials have very different storage footprints. Some materials, such as packaging peanuts and pre-filled pads, take as much space on the floor as they do in the carton. These "ready-to-go" materials are not compressed for storage. Air pillows, on the other hand, are not filled until they are ready to place in the package; the un-inflated films are stored in rolls that take up much less space than the filled pillows. Expandable foam cushioning systems deliver the greatest volume of packaging material for the least floor space: two 55 gallon drums of liquid can expand to fill an entire tractor-trailer with foam!

Again, the higher your shipping volume, the more floors space matters in your cost calculation. Your calculation will also have to take into account how valuable your floor space is to you. If you've got plenty of extra space, storage costs for packaging materials may not be a big factor. But if you need every square foot to be productive, it may make sense to invest in protective packaging solutions that can be stored with a minimal footprint.

Putting Protective Packaging Costs in Perspective

Of course, material costs do matter, too. For many shippers, especially low-volume shippers with products that need minimal protection, a few crumpled balls of Kraft paper will do just fine. There is no need to spend money on more expensive and sophisticated solutions if a low-cost, low-tech solution works for you.

However, many shippers overlook the total cost of protective packaging when evaluating their options. Choosing the wrong material can end up costing big bucks in the end if it drives up product replacement, labor, shipping or storage costs.

Pantero can help you find the right packaging solution for your products and shipping needs. Contact us for an expert consultation on your protective packaging options.   

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