A new analysis from Tosca suggests that packaging decisions are playing a far larger role in supply chain costs than most companies account for, influencing everything from labor and freight to automation performance and product damage. While packaging is often treated as a procurement line item, the study argues that its true cost is distributed across multiple operational areas, making it easy to underestimate its financial impact.
“Packaging is one of the only variables that touches labor, freight, automation, product quality, and sustainability at the same time,” said Holly Maher, VP of Commercial Sales at Tosca. “Yet it’s rarely perceived or accounted for that way.” A strategic approach to packaging selection is crucial.
Damage, Labor, and Downtime Add Up
Among the findings, the analysis points to product damage as a significant and often overlooked cost driver. As much as 11% of unit loads arriving at distribution centers experience some level of case damage, with higher loss rates for fragile goods.
Cold chain environments further compound the issue. According to the study, corrugated packaging can lose 50–60% of its compression strength as humidity rises from roughly 50% to 90%, increasing the likelihood of load failure.
Labor is another major factor. Packaging-related activities such as box assembly, taping, and cleanup can account for 30–40% of total packaging costs on processing lines, particularly as warehouse wages have risen sharply in recent years.
“These are micro-tasks that multiply across every shift,” Maher noted. “They’re rarely attributed back to packaging decisions, but they are a direct consequence of them.”
Automation Performance Tied to Packaging Consistency
The study also highlights the growing link between packaging and automation performance. Inconsistent packaging dimensions can lead to conveyor jams, mispicks, and system stoppages.
Automation downtime is estimated to cost between $23,000 and $32,000 per hour, making even minor disruptions expensive.
“Automation is only as reliable as the packaging it handles,” the report notes, pointing to dimensional variability in corrugated as a common source of operational interruptions.
Freight Efficiency and Cube Utilization, Regulatory Pressure
Transportation efficiency is another area where packaging decisions have a measurable impact. To prevent crushing, corrugated loads are often capped, leaving unused trailer space.
The analysis cites pilot programs where improved packaging design increased cube utilization, reducing transportation costs by as much as 25% by lowering the number of required shipments.
The study suggests that regulatory developments, including Extended Producer Responsibility (EPR) frameworks, are beginning to expose lifecycle costs that were previously hidden.
“Packaging has always carried lifecycle costs. EPR simply makes them visible and measurable,” Maher said. As regulations expand, companies are being pushed to evaluate packaging not just on purchase price, but on its full impact across operations, sustainability, and compliance.
Shift Toward Total Cost of Ownership
Overall, the analysis concludes that companies are beginning to move toward a total cost of ownership approach when evaluating packaging.
Rather than optimizing for the lowest upfront price, leading operators are increasingly assessing packaging decisions based on their network-wide impact on efficiency, risk, and cost.
“Fragmented decision-making leads to missed ROI,” Maher added. “The opportunity is to evaluate packaging across the full system, not just procurement.”
To access the entire study, visit Tosca.
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Is Packaging Driving Warehouse Inefficiency?
Rick LeBlanc, EMBA, is the founder and editor of Reusable Packaging News (subscribe to the free newsletter) and editor of Western Pallet Magazine. A supply chain journalist with more than 30 years of experience, he specializes in pallets, reusable packaging, material handling and related operations. Rick is co-author of Pallets: A North American Perspective and Pallets & Progress: A Collected History of Pallets and Palletized Handling 1922–1945. He is also an advisory board member of the Virginia Tech Center for Packaging and Unit Load Design. Read Rick’s full bio.
