Every logistic manager knows that professional packaging materials are a must-have for smooth supply chain operations. The guarantee of safe storage and shipment is the most basic promise a company must make to its end clients. However, there is more at stake than avoiding damaged products in transit: mitigating the ever increasing shipping costs.
The Impact of Shipping Costs on Logistics and Pricing Policies
The cost of shipping a product must be reflected in the final price of that product. That is one aspect – because more and more companies are offering free shipping in order to stay competitive. Another aspect is that logistic and operational costs have a visible impact on the overall financial results of any company.
Where does packaging fit in this idea, you may ask? Packaging has everything to do with efficient use of storage space, both in your warehouse but also, most importantly in the trailer which ships your merchandize to customers.
Merchandize Is the No. 1 Category in Shipping
Shipping and transportation companies became aware years ago that their number one client is companies that ship goods worldwide. There are no surprises here, given the rise of online shopping. Distance and country borders have ceased being barriers to global trade for some years now. The Amazon business model has spread all over the planet, and thanks to drop shipping and other smart ways of selling goods online without carrying stocks, shipping companies are busy 24/7, 365 days per year.
Even for retail and ecommerce companies selling products to end consumers, the cost of shipping involves moving stocks of products from distribution hubs to local warehouses. Thus, even small retailers have to deal with reusable packages and a large volume of products coming from their suppliers. In most of the cases, the relationship with shipping companies must be managed by the retailers – and the shipping costs, reflected in the final price of the products, must be also borne by the latter.
The unwelcome surprise came when shipping companies decided to change their pricing policies and introduced dimensional weight (DIM). This method of pricing estimates the weight of a packaging container depending on its dimensions (length, width, height). If you want to test this method, DHL offers an online calculator. It is an eye-opening experience, seeing how a single change in one dimension impacts the estimated weight.
Attention! Even if you weigh the container and get a lower figure than DIM, the transporter will still apply the DIM value in calculating your shipping costs.
This means one thing: you have to devise a smart way of packing products inside your containers in order to pay a fair price for your shipments. The experts at Logistic Packaging have prepared a list of smart, actionable tips for you:
1. Use Divider Systems and Compartments inside the Packaging Materials
Dividers have the purpose of creating tight fitting spots for as many products as possible. The precise slots they create inside the packaging materials (containers, boxes, pallet boxes) will help your warehouse workers place the maximum amount of products, compared to the haphazard system of placing items inside without any guidelines.
2. Use Adequate Packaging Solutions for Each Product
Some products – especially metallic parts and components, are very small but heavy. Regular plastic storage bins and trays are not strong enough to hold them. You would be tempted to place them in larger, reinforced plastic containers, such as a rigid pallet box. But the DIM cost will be absolutely out of proportion. This is why there are special ranges of packaging materials – such as the steel storage bins – which have compact dimensions but are capable of holding heavy loads.
3. Group Orders
Grouping is something transporters do on an everyday basis – otherwise they would never run a profitable business. Just like they do not send a trailer half full, you should never send a pallet half loaded. You will still pay at DIM value, and plastic pallets range from 600×400 mm to 1200 x 800 mm. Since you pay the price, have the transporter deliver more than one order, grouped on the same shipping bill.
4. Resist the Temptation of Using Small and Light Packaging Materials
Should you downgrade to cardboard boxes and wooden pallets? They are smaller and lighter – they will probably bring the DIM price down. But they will bring your long term losses up. Remember that your company started using professional plastic packaging because you had to keep repairing and replacing old packages and you always had a significant percentage of products damaged in transit. By going back to unreliable packages, you will simply change one cost with another – and possibly a higher one.
5. When In Doubt, Ask for Professional Advice
The team of professionals at Logistic Packaging is always ready with competent advice and product recommendations to fit your specific needs and mitigate your shipment costs. If necessary, we can create fully customized packaging materials for your products, such as cut&weld boxes, thermoformed trays and any other packaging design.
At Logistic Packaging we believe in saving costs in a smart and sustainable manner, by using professional packaging solutions adapted to your specific application. Get in touch with us for a quote by email or schedule a live Skype call!