Comparing returnable transit packaging cost to expendable
3 “real world” cost comparisons of industrial transit packaging options
If you work in a logistics role, or a specific industry – such as automotive, engineering, specialist manufacturing and aerospace, to name just a few – you’ll be aware of the arguments for using both expendable and returnable packaging setups.
However, you may be surprised that reusable or returnable transit packaging makes up only 35% of the total packaging within worldwide supply chains. This statistic means that expendable packaging – i.e. packaging discarded after a single use – remains dominant.
But why is this? And is it cheaper to use single trip packaging (such as corrugated boxes)?
This guide analyses three different scenarios to allow you to make an informed decision on the best solution for your specific industry/application. It includes:
- Typical costs for using single trip corrugated.
- Switching to returnable transit packaging.
- How a JIT / KanBan system can alter costs.
- Other points to consider.
Please continue reading, or use the table of contents to go straight to your area of interest.
Quick reference / contents
Reusable vs expendable packaging options
What is expendable packaging, and how does it compare to returnable?
Expendable packaging refers to packaging used once (i.e. single trip) before being disposed of (or hopefully recycled). Returnable packaging is containers used over multiple trips or journeys as part of a supply chain. Expendable packaging will have lower upfront costs, whilst returnable packaging is typically more cost-effective over the longer term.
Whilst this provides a good summary, there are considerably more factors that go into deciding which option is best for a specific business or industry.
So, rather than immediately analysing costs, it is essential to define the different approaches, their strengths and weaknesses, and how they can potentially be more suited to specific industries or markets.
What is reusable packaging?
Also commonly referred to as returnable transit packaging (RTP), reusable packaging is, as the name suggests, packaging that businesses can reuse over many uses/trips.
Often taking the form of plastic tote boxes, Euro containers or even custom Correx® boxes (including Rapitainer®), this packaging will last over many years and 100s of journeys without suffering degradation in performance.
Using returnable packaging is common in industries such as automotive and aerospace, where there are well-established supply chains.
And even though they make up only around 35% of the global market, this still means that the “green” or sustainable packaging market is worth over $225 billion.
What is expendable packaging?
In contrast to this, expendable packaging (also commonly referred to as single trip) is packaging discarded after a single journey.
Most commonly using corrugated cardboard packaging for industrial applications, this packaging is commonplace for inbound logistics, service parts and “after-market” logistics. It is, of course, also widely used for shipping goods to end consumers (for example, eCommerce packs).
Is expendable packaging really cheaper than using returnable?
One of the reasons that expendable packaging remains popular, even with the potential for switching to returnable transit packaging, is cost.
Upfront costs for corrugated cardboard are considerably lower than returnable plastic totes and containers. But does this translate to lower costs on an ongoing basis?
The following three scenarios – taken from real-world businesses – analyse the differences between using single trip corrugated packaging, switching to reusable totes/shipping boxes, and the impact of also using a KanBan (i.e. Just in Time) system.
Single trip corrugated
Example of typical costs when using single trip corrugated cardboard packaging
So, let’s start with single trip corrugated cardboard – perhaps the most prevalent form of transit packaging.
The below diagram illustrates 3-year costs if using single trip corrugated packaging. These figures may vary depending on the size of your business, usage, and specific application, but it should be possible to use the general framework for your organisation.
Let’s assume your business sends out 14 pallets of goods per day as an example of usage. On each pallet, there are 20 boxes, which equates to sending 280 boxes each day. Scale this up to one year (based on 312 days of deliveries – 6 days per week), and you would send 4,368 pallets or 87,360 boxes.
At £1.50 each, this would be an annual cost of £131,040.
If your business maintained your level of trading, the figures/costs above would be the same in Year 2 and Year 3.
Returnable packaging loop
Cost difference if switching to returnable transit packaging
The second example below provides comparative figures if switching from single trip corrugated to traditional returnable packaging setup or other reusable tote containers (such as Rapitainer®).
These sums work on the assumption that you still send 14 pallets of goods per day and 20 boxes per pallet. The difference is that you are operating a 4-week returnable cycle (allowing a week of containers at your facilities, one week’s worth in outbound transit, a week’s worth at your customers’ premises and finally, a week’s amount in return transit).
Operating a 6-day week and a daily volume of 280 boxes, the number of containers required for four weeks would be 6,720.
Purchasing at this volume, the cost of Rapitainer® or another RTP/multi-trip container – would typically be £10 per unit. This pricing means the 4-week cost would be £67,200. However, this 4-week cost would also cover Years 2 and 3. The reuse of the containers removes the requirement for purchasing replacements.
These figures illustrate that you can expect an ROI within six months compared with single trip corrugated. You should also achieve approximately two times the return on investment at the end of Year 1.
As there is no requirement for purchasing new containers over the three years, by the end of 36 months, the ROI has risen to around 5 x the initial investment.
This change results in a cost-saving of £63,840 by the end of Year 1 (48.7%). Total savings are £325,920 (82.9%) by the end of Year 3.
Returnable transit packaging & KanBan
Combining reusable shipping containers with a “just in time” system
This final example calculates the expected costs if your customers use a Just in Time or Kanban service for the products they purchase from you. This setup allows for a considerably quicker turnaround of the containers for your customers’ deliveries.
Assuming two days at each site (yours and your customers), plus a day in transit each way, there is a requirement for six days’ worth of boxes. The amount used per day remains the same as in previous examples (14 pallets per day, 20 boxes per pallet, totalling 280 boxes per day).
The 6-day usage would therefore be 1,680 boxes.
Purchasing at this volume would mean a £15 unit cost and a total investment of £25,200.
This example illustrates that achieving an ROI takes approximately ten weeks compared with single trip corrugated. An approximate five times return on investment is achieved by the end of Year 1
As no new containers need to be purchased across the three years, by the end of 36 months, the ROI has risen to almost 16 x the initial investment.
Alternatively, this is a cost-saving of £105,840 by the end of Year 1 (80.77%). Total savings in 3 years is a huge £367,920 (93.5%).
Should you switch from expendable packaging?
Assessing the best packaging option for your business
When you look at the figures in isolation, it can seem incredible that only 35% of transit packaging used is returnable.
But as always, the statistics do not tell the whole story – it is not as easy as simply “switching” to returnable packaging.
For example, the initial upfront investment of using returnable totes and containers is considerably higher than using expendable packs. These upfront costs can mean that purchasing returnable plastic totes and containers has to be treated as an investment rather than a cost – which can raise obstacles to adoption in many businesses.
Besides this, returnable packaging adds a great deal of complexity to the supply chain.
You need well-established return transit, which is not always the case at many businesses (vehicles/transport may do multiple “drops” at different sites, for example).
You must also manage loss, theft and even damage to your returnable container inventory.
And finally, expendable packaging is also much for flexible. If the specifications of a product change or your business introduces new lines, you can simply specify custom packaging tailored perfectly to your requirements. Similarly, suppose you find your packaging is not performing as hoped. In that case, it is much easier to redesign corrugated packs than modify or completely “write off” returnable containers that are not suitable.
Single trip vs returnable packaging analysis
The answer as to whether you should use single trip packaging or returnable containers is much more nuanced than it first appears.
This article on single trip vs returnable packaging presents the arguments for both options in more detail. Alternatively, you can contact a member of the GWP team for further information.
As GWP supplies both single trip corrugated packaging (expendable) and reusable handling/storage containers (including Correx® and moulded plastic), you can ask for genuinely impartial (and expert) advice on the best solution for your specific application or industry.
Expendable packaging vs reusable packaging
So although the answer isn’t as clear cut as the figures may initially make it seem, there is a compelling argument – from a purely cost-saving perspective – to switch to reusable packaging containers.
At the very least, if your business uses high volumes of expendable packaging (particularly that such as FEFCO 0201 style boxes), you should at least consider and research if this would be a viable option for your business.
Put simply, ditching expendable packaging could significantly impact your ongoing costs.