Shipping Strawberries in Corrugated Saves $6.6 Million, Says Corrugated Packaging Alliance

If you are confused about environmental claims and counter claims, not to mention cost comparisons between reusable and single trip recyclable packaging systems, you aren’t the only one.

In June 2013, IFCO Systems announced that reusable packaging provided significant environmental benefits versus expendable packaging. According to IFCO, an independent report it commissioned with Franklin Associates indicated that reusable plastic containers (RPCs) generate 82 percent solid waste, consume 92 percent less water, require 49 percent lower energy demand and lower ozone depletion by 76 percent on a weighted average of the top ten produce commodities shipped, versus the same amount shipped in display-ready corrugated boxes.

Now a new economic case study from the Corrugated Packaging Alliance, using Full Disclosure(TM) modeling software developed by the American Forest & Paper Association and the Fibre Box Association, says that in a specific case study, shipping fresh strawberries in corrugated containers costs 13 percent less than shipping the same volume of strawberries in reusable plastic containers (RPCs). In the case scenario presented , an annual savings of $6.6 million was realized by shipping the strawberries in corrugated versus RPCs.

According to the release, data was provided by a large strawberry grower in Salinas, California. This was used to populate a cost-analysis tool, which analyzed total annual system costs. The case study compared the costs involved in using corrugated containers vs. RPCs to ship 144 million pounds of strawberries to Cincinnati, Ohio.

Results of the analysis show that RPCs incur $12 million higher trucking and handling costs than corrugated, due to RPC backhaul trip requirements, handling costs at return distribution centers (DC), plus washing costs, and higher trucking costs from farm to retailer to DC. The return trip for RPCs, which includes additional handling, trucking and washing, adds $8.3 million in costs that are entirely avoided by using corrugated containers. At an estimated $0.10 per container, washing alone adds $1.6 million to the annual cost of using RPCs.

The report notes that corrugated containers do not require the same degree of backhauling because they are recovered for recycling after use at retailer locations. (The Corrugated Packaging Alliance said that it did not consider the handling costs at retail of cardboard or RPCs, which it considered to be a wash.) Supermarkets and retailers have helped propel corrugated recovery to an impressive 91 percent in 2012, and they earn revenue from the sale of used corrugated. Corrugated has long been the most recycled packaging material in the world.

The study states that the system cost savings from using corrugated containers is spread across supply-chain stakeholders. Using a special rental analysis module in the software, the data indicates that, in a typical leasing arrangement, the retailer pays $4.6 million (13 percent) more to receive the strawberries shipped in RPCs as opposed to corrugated. The grower pays $3.8 million (40 percent) more to ship in RPCs. So both growers and retailers save money when corrugated containers are used to ship strawberries in this case scenario.

Examining the relative costs and benefits of shipping-container alternatives requires a deep dive into all the cost factors involved along the supply chain, the release concludes, stating that case studies, like this one, detail the impact of major cost sensitivity factors on the total distribution system. They are significant, when considered on an annual basis.

The Strawberry Case Study is available for download on the Corrugated Packaging Alliance website (www.corrugated.org).

More generally speaking, the repositioning of empty containers or pallets is a cost. Whether or not it skews an application towards a single trip recyclable or reuable application can hinge on the magnitude of that cost impact. Where containers can be put back to service closer to the point of emptying (more nodes in the network) or where cheap backhaul rates or other creative logistics solutions exist to mitigate relocation cost, long distance reusable solutions can still make good sense.

 

 

 

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