Now, as in the past, the main incentive for switching to reusable transport packaging remains to save money. While trends such as automation, labor shortages, and sustainability concerns are now also playing a crucial role in driving the increased adoption of reusables, cutting costs never goes out of style. In this article, I’ll take a closer look at the economic benefits that make a compelling case for reusables in many use cases.
Why does reusable transport packaging save money?
How does reusable transport packaging save money when it can cost substantially more than disposable packaging? It comes down to reuse. To paint a simplistic picture, let’s say you are buying a disposable container for $1 while it costs you $15 to purchase a reusable container. If that container is used 150 times, the cost per use is $15/150 or 10 cents per trip (plus reverse logistics costs) versus $1 for the expendable container.
Is 150 trips a reasonable number? It certainly can be.
I worked at a distribution center where our plastic pallets cycled approximately twice per week – around 120 trips per year, and our attrition rate (loss or damage) was less than 5% annually. We believed our cost per use was mere pennies. Meanwhile, the incoming wood pallets that we did not need for downstream shipping to retail stores could be sold in better condition (because they were not used for downstream shipping and so were not damaged) for significantly more money to pallet recyclers. Although the cost of pallets was typically built into the the price paid for merchandise, we could sell the better-condition pallets for more money. I estimated that for each plastic pallet used, we probably generated an extra dollar or two in incremental income from the sale of pallet cores. Today, the extra revenue would be greater.
Another example the cost of using reusable steel drums may be between a factor of three or four times lower than for single-use drums. Another study found that reusable containers for transporting LCD panels (or parts) within the international supply chain are economically beneficial.
A 2023 study by Searious Business and Zero Waste Europe compared single-use big bags versus reusable bags and found that the bag owner (system provider) would receive a payback between Year 2 and Year 3. Based on the capital expenditures for the system provider, the ROI is at 86% over 10 years, as shown in the figure below.
“In conclusion,’ the report states, “there is a vast potential for transforming transport packaging into reusable packaging at scale. Speciﬁcally due to the vastly implemented tracking and tracing of the products within, and the highly controlled environment, there is a high likelihood for reusable transport packaging to achieve a high return rate. As a result, the reuse system can reach high numbers of rotations which makes the case for an investment into the set-up of such a system. For the system users, there are little differences in costs, as reusable big bags and single-use big bags are expected to not vary greatly from one another, regarding design and costs.
“The model shows that the purchasing costs of single-use packaging and the pay-per-use fee of reusable packaging can be the same. The big advantage for users of reusable transport packaging is that they do not have to organise the disposal of their packaging and can run these operations without creating waste.”
Whether the use case involves reusable packaging used internally, or provided on a per-use basis by a service provider, such as through per-trip rental, there is overall value provided. In a self-managed pool, packaging users can enjoy a better quality container at a lower price than expendable containers. In a per-use model, the provider can offer an equal or better quality container at a similar price, as suggested above, while eliminating disposal costs. In the case of better quality packaging, it can deliver additional benefits such as those listed in the next section.
Ultimately, the basic formula for cost comparison is quite simple: the delivered cost of expendable packaging versus the cost of reusable packaging purchase and management, including transportation, handling, inspection, and washing as required, and end-of-life recycling, etc. Variables such as distance, container volumes, distribution patterns, and customer or regulatory requirements can impact that equation and tip the economic scale one way or the other. Historically, the best opportunity for reusable were high-volume containers with limited ship-to locations that were ongoing – like the proverbial “milk run” and other predictable flows such as tier 1 suppliers to assembly plants or from bakeries or beverage producers to grocery retailers.
Applications with highly fragmented or irregular shipments or fragmented points of delivery have been more challenging to address – such as pallets delivered to construction job sites. The economic case for reusable pallets, however, is now receiving greater recognition in the construction sector in countries such as Norway and the UK.
Let’s look at the economic benefits of reusable transport packaging, including both direct and indirect advantages.
Economic benefits of reusable transport packaging
Less material on a per-trip basis
The durability and longer lifespan of reusable containers reduce the need for frequent replacements. As a result, less material is consumed on a per-trip basis than for expendable packaging, contributing to a better value solution. As discussed above, more material-intensive reusable packaging often requires a higher initial investment, but over time, it generally proves to be more cost-effective than single-use packaging when considered on a per-trip or per-use basis.
Less waste generation
For sectors such as automotive, the elimination of solid waste was an important consideration in the adoption of reusables. Back in the 1990s, there were stories of automotive facilities with 10-acre yards heaped with scrap pallets. In 2004, the RPA conducted a Life Cycle Analysis study with Franklin Associates to measure the environmental impacts of reusable containers versus the existing expendable system in the produce market. It determined that RPCs produced 95% less solid waste.
Aside from the disposal charges for packaging waste, don’t forget to quantify the handling and rehandling costs saved by using reusable versus the hours involved in handling packaging waste – for example, taking corrugated to the back of the store and feeding it box by box into the baler versus simply collapsing RPCs and staging them for pickup.
In the manufacturing scenario, the precise orientation of parts in reusables helps facilitate robotic assembly, or the placement of parts into assembly kits can help manual assemblers improve productivity by reducing travel time and the risk of forgetting a part. Similarly, high-efficiency automated consumer products order picking systems such as those offered by Autostore or Cimcorp, for example, often require rigid and dimensionally accurate reusable containers, resulting in dramatic productivity gains and storage efficiencies.
Even in a manual picking environment, standardized RPCs allow for the easier and more stable stacking of products for order selectors. At retail, stocking time for display-ready RPCs is dramatically reduced. Rather than removing products from cases to build a display, the RPC is simply placed on the shelf. In a 2015 study, RPCs were found to be from 5% to 53% more efficient than one-way packaging in stocking, order picking, transport to the shelf, and folding, stacking, and baling.
Less product damage
Reusable packaging is typically designed and constructed with sturdier materials than single-use packaging. These materials can better withstand the rigors of transportation and handling, providing superior protection against impacts, vibrations, and other forms of transit-related stress. Reusable containers are often designed for efficient stacking, which not only optimizes space in vehicles but also adds stability to the load, decreasing the chances of tipping and subsequent damage. Design for ventilation also allows for better temperature control, contributing to improved shelf life.
This message is underscored by research. A 2013 study initiated by Stiftung Initiative Mehrweg (SIM), a German organization that advocates for the use of reusable packaging systems, and carried out by Fraunhofer Institute and the University of Bonn, determined that if only reusable containers were used in the German market, only 1,100 tonnes of fruit and vegetables valued at two million Euro would have been lost. It was estimated that if only single trip packaging had been used, the lost product would translate to 36,000 tonnes valued at 68 million euros.
Improved worker safety
As mentioned above, reusables can support the introduction of automation, which is a crucial way to improve worker safety. Also, design features such as handholds and access doors can support better posture and reduce risk. The elimination of box cutting required with corrugated packaging is another important safety benefit. Reusable pallet wraps and straps can help eliminate the risk of slip and trip injuries associated with waste stretch wrap and banding.
While safety has often been discussed as an intangible benefit, it can be quantified over time. For example, we tracked lost time accidents associated with empty pallet handling at the distribution center referenced above. At the time, we calculated that a switch from heavy wood pool pallets to lightweight plastic pallets for order picking resulted in a reduction of 60 fewer lost time injury days annually in one warehouse alone. Why? Simply put, the plastic pallets were lighter and easier for warehouse workers to slide from stacks and did not present as many issues related to shards or exposed fasteners.
Conclusion: strong economic case for reusable transport packaging
Evidence continues to mount supporting the economic case for reusable transport packaging. As outlined above, there are many compelling economic advantages. Some use cases are much more straightforward than others. Even if the financial benefits are not obvious or the use case complex, starting a conversation with reusable transport packaging providers might be well worth your while.