How to Pack Lighter and Tighter for Eco-Smart Shipping

[The following is an excerpt from “The Green to Gold Business Playbook: How to Implement Sustainability Practices for Bottom-Line Results in Every Business Function,” by Daniel C. Esty and P.J. Simmons, published by Wiley. You can read an interview with Esty and Simmons here.]

How products get packaged and loaded for transport can significantly alter logistics-related costs and environmental impacts. Excessive packaging and shipping materials weigh down vehicles and force them to work harder, resulting in higher fuel costs and emissions. Likewise, ineffective load planning leads to empty vehicles that waste time and money. A truck shipping only 25 percent of its capacity burns two-and-a-half times more fuel per ton-mile as one that is 75 percent full.

Eco-smart companies have found that eliminating unnecessary packaging and increasing “load factor” — the percentage of a vehicle or container’s capacity being used — cuts fuel costs, lowers shipping costs per unit, improves asset utilization and reduces emissions. For instance, a modest redesign of cereal maker Nature’s Path’s product boxes enabled it to stack six more boxes per pallet, which led to an 8 percent improvement in load factor on trucks. Dell’s switch from wooden pallets to lighter, recycled plastic “slip sheets” saved over $30 million in packaging expenses in the first year and boosted load factor in shipping containers by 25 percent. Walmart boosted its U.S. fleet efficiency by 60 percent between 2005 and 2010 in large part by consolidating deliveries and loading trailers more effectively.

Best-practice companies focus on the following areas to cut costs and reduce eco-impacts from logistics-related activities:

Eliminate unnecessary items from shipments. Does your customer really need or want everything that accompanies your product — manuals, duplicate cables or chargers, fancy boxes within boxes — or will they just end up in the trash or recycling bin? Cisco, for instance, recently replaced lengthy paper documentation for its IP phone with concise 3 x 5 cards, and now the company ships three phones in the same space that previously held only two.

Root out excess packaging and shipping materials wherever possible. Puma, after trying for 21 months to reduce the size of its shoe boxes, decided in 2010 to eliminate boxes altogether and replace them with a “clever little bag” — a packaging innovation that is expected to save the company 500,000 liters of diesel annually on top of cutting many other eco-impacts. Sometimes a lot of packaging is required to protect especially fragile or hazardous materials — something that Amazon.com’s “Frustration-Free Packaging” initiative learned the hard way when its scaled-down packages failed to protect computer hard drives. When product protection is an issue, explore air cellular products and inflatable packaging systems, which create air-filled cushions that can provide better protection in smaller, lighter packages. Reducing packaging is also better for consumers who must deal with recycling or discarding it.

Switch to reusable (and recyclable) packaging, containers and pallets. Use collapsible, nestable and stackable containers. CAPTIN, which makes aluminum wheel products for Toyota and ships 6,000 wheels a day, replaced cardboard cartons and wooden pallets (which customers threw away or recycled) with reusable plastic pallets and dividers that are returned to the company after each use — an investment that drove down per unit costs, raised productivity in packaging, was paid back within two years, and is preferred by employees and customers.

Use load-planning software. “Loading a truck may seem simple, but making sure that a truck is truly ‘full’ is a science,” says Pat Penman, director of Global Environmental and Safety Actions at SC Johnson. A truck that appears completely full may only be 90 percent full, and reorganizing to use that extra 10 percent will translate into bottom-line and environmental results. Load planning software with simulation capabilities can help determine the most efficient ways to pack trucks, railcars and air or sea containers. Look for software that factors in variables like trailer size, unit load sizes, package size, stackability, weight, safety and regulatory requirements.

Consolidate loads. As IBM supply chain experts Paul Brody and Mondher Ben-Hamida have pointed out, “there’s a reason Amazon charges you less for shipping if you consolidate your order and have all items shipped at once — it saves them money.” Consolidating shipments may take more time and sorting, but the returns can be significant. CVS Pharmacy eliminated 6,541 routes across its carrier network by consolidating its deliveries, a move which saved 218,730 gallons of fuel and 2,260 metric tons of CO2 emissions. In addition to loading as many items on a truck as possible, paying attention to the weight of loads also has a significant impact. A truck filled to maximum weight and volume capacity will be more fuel-efficient than a truck simply filled to maximum volume capacity. SC Johnson cut fuel usage by 168,000 gallons in a year by strategically loading multiple orders and multiple products on the same truck to optimize both volume and weight capacity.

Fill empty backhauls. If your trucks come back empty, then you are wasting half of the cost of delivery. The Voluntary Inter-Industry Commerce Solutions Association runs a program called “Empty Miles Service” that matches one company’s empty trucks with another company’s cargo needs. Macy’s reports annualized transportation cost reductions in the hundreds of thousands of dollars. Schneider National, one of the shippers that participates in the Empty Miles program, reports an increase in annual backhaul revenue of 25 percent and fuel savings of over 5,000 gallons.

Image CC licensed by Flickr user toolstop.