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News release

Australia

Companies like Walmart are realising the potential cost savings and sustainability benefits from choosing carefully the packaging in the boxes they ship around the world

Smart packaging can eliminate shipping excess space or ‘air’ instead of products.  Global retailer Walmart has redesigned its packing cases, eliminating 727 ocean containers per year in the transport of its goods between Asia and North America


​AUSTRALIA, 14 OCTOBER 2013 – In today’s data driven world there are now ways to analyse the optimal size and shape of boxes that are shipped around the world, to provide companies with not only cost savings from eliminating excess space or ‘air’ from their shipping containers, but also the sustainability benefits that follow.

According to Jones Lang LaSalle’s Supply Chain and Logistics Solutions Team, understanding the optimal size and shape of boxes for packaging can have multiple positive impacts.  Firstly, it reduces the amount of corrugate packing required.  Secondly, it reduces excess space or ‘air’ in the box.  Thirdly, it improves the density of the goods being transported with more packages per truck, which results in fewer trucks and lower freight costs.  The sustainability benefits are less corrugate, less filler and fewer trucks to haul the goods.

US Managing Director of global Supply Chain and Logistics Solutions, Rich Thompson said, “Global retailer Walmart is a great example of the multiple benefits companies can achieve.  Walmart recently redesigned the shipping cases of 200 different products.  

“This redesign of their packing cases eliminated 727 ocean containers per year that transported their products between Asia and North America. This translates to savings of more than USD2.5 million annually, assuming each freight container costs $3500 on a conservative estimate.

“Lee Scott, the former Chief Executive Officer of Walmart, announced that a 5 percent reduction in packaging will save Walmart and its suppliers $10 billion. This 5 percent reduction in packaging translates to removing 213,000 trucks from the road, eliminating 66.7 million gallons of diesel fuel and generating $34 billion in savings across the extended supply chain,” said Mr Thompson.

Australian Director of Corporate Industrial Solutions, Andrew Maher is giving an Australian perspective on supply chain and logistics solutions at the CSCMP (Council Supply Chain Management Professionals) Conference in Denver next week.

Mr Maher said, “With fuel costs being identified as one of the biggest expenses for transport operators in Australia, load optimization and less truck movements is good for the bottom line and good for the environment.

“With estimates that transportation typically accounts for 50% of all operating costs, Australian companies investing in new packaging technologies have the opportunity to drive down their supply chain costs.  Less storage volumes also mean smaller warehouse requirements, which adds to the costs savings on the real estate front,” said Mr Maher.
 
Mr Thompson said the humble box and packaging design has now been made a science.

“Usually, physical distribution is not taken into consideration when designing consumer packaging.  Traditionally the focus is on consumer appeal, as expected.  Consumer firms often view packaging as a marketing responsibility while industrial businesses see it as an engineering function.

But our view is that packaging design should be determined by both marketing and supply chain experts to achieve results such as load optimization, reducing packaging costs and damages and achieving greater environmental outcomes.

“Shipping density, meaning the weight per cubic foot, is a critical cost factor.  
“Shipping 100 pounds of feathers can be more expensive to transport than shipping 100 pounds of ball bearings. By designing shipping cases to fit more on a pallet or in a truck will reduce logistics expenses.  

“In fact, the average total cost of corrugate, warehousing and transportation can be reduced as much as 10 per cent using a packaging optimization strategy.

“Packaging optimization is key to big supply chain benefits,” concluded Mr Thompson.