Let's Get Wonky About Packaging and Logistics

The secret mathematical formula used to calculate your actual packaging costs

The total cost of shipping isn't just about transportation. It's about damage, labor, and customer loyalty too. Seeking top-secret packaging algorithms? These aren’t really age old inherited equations calculated bare foot with pebbles back in the day. We're talking about adopting really thought out, data driven strategy and executing.

It doesn't take a rocket scientist or an ancient Chinese mathematician to figure out that you're losing money. And fast. So, where's the leak?

When you think shipping, you think Point A to Point B. "How much is [insert world-renowned freight carrier here] going to charge me to get my shipment there in my time frame?"

But, there's more to it than that. And those additional costs are what can really add up to subtract from your profits.

Enough of the math jokes. Let's get down to it.

Visible Damage

OK, so maybe this one is a no-brainer. If you have a damaged package or pallet, you're losing money, right? I mean, that's just good business knowledge, and common sense stuff we all know. People are less willing to buy a damaged box. Think about it, would you buy a damaged box?

You're looking at having to discount your item. Maybe you even have to replace it. And that's not cheap. But that's something you may already have built into your plan. Because damage happens to all of us, including you, always keep that mind.

Concealed Damage

When a truckload arrives at a receiving dock with a shifted pallet or crushed boxes, you know that there is a potential for damage. But what about the products within the boxes that are damaged in the jostle of the journey that the customer won’t see until they take the product home.

Concealed damage is not known until the packaged is opened. Sometimes that can even be products in the middle of a pallet that looks perfectly fine. That's the kind of damage that you're not prepared for, but that will take a huge bite out of your profit if you're not ready.

Labor Costs

Beyond damage costs, you have to consider labor costs. Labor is the most expensive part of the packaging process. Poorly packaged products or damaged products cost additional time to unload from trailers. Damage claims, freight claims, rework, etc.: all of these things add up to unproductive time.

A typical freight claim takes two hours to process. That's two hours you could be unpacking another trailer, making sales calls, processing invoices, or ensuring that products make it to your customers.

You've now wasted a total of up to two man hours because of a single failed pallet. Now, consider how much time would be lost if you had a fully loaded trailer of up to 60 pallets.

Potential Injury Costs

A worker injured on the job ain't cheap. It can cost anywhere from $10K to $100K in both direct and indirect costs: medical costs, lost time, hiring and training a replacement, paperwork, etc. And that's automatically coming out of your bottom line. Nobody likes injuries, especially your employee that had to bear the brunt of it.

Lost Customer Cost

A disappointed customer is a lost customer. Damaged packages, higher costs due to all these hidden items:it's a recipe for losing your customers and that's gonna cost you. On average, customers tell twice as many people about bad experiences than good ones, so you're looking at a huge potential loss, just from one pissed off customer.

Visible Damage + Concealed Damage + Labor Costs + Personal Injury Costs + Lost Customer Cost =
Totally Crazy Out-of-Control Shipping Costs

Damage impacts long term profit.

Filing a freight claim can typically take about two hours: that’s two hours of lost productivity. Damaged items also must be inspected and stored, taking up more time and requiring additional space. When prorating the total expense of damaged goods storage, including property taxes, utilities, and rent or mortgage, costs escalate.
The cost of any item has just increased exponentially. You're looking at, potentially, thousands out of your bottom line. And if you're not in Logistics or Packaging, you're not even gonna pay attention until something directly affects you and your cost center.

But the truth is everyone is responsible for damage. Every group is affected. Every cost center touched. Every budget slashed. Damage is everyone's problem. The answer is figuring out how to stop damage from happening.

Because shifts happen.

It is important to understand that, in general, most loads will shift to some degree due to the various movements that occur inside a transport container. The importance and need for proper load securement methods will prevent damage and potential injury during unloading.

No amount of proper wrapping can protect against void between those pallets once they’re loaded into trailers because no matter how you place the pallets in a trailer, you’re going to have voids which will allow for pallet movement during the journey.

One study of load unitization and securement methods inside trailers for the grocery and food distribution industries found that, with respect to dunnage used to prevent the shifting of loads, nearly 48% of shipments had no stabilization within the trailers and 7% of stabilization devices that were installed failed when used. Expensive lumber or metal bars can only stop front to back movement, but dunnage air bags eliminate movement front to back, side to side, as well as up and down.

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Let's Get Wonky About Logistics