Delivering the Goods: Benefits of Reusable Shipping Containers (Executive Summary)
Anyone who has ever moved from one home to another has probably picked up some empty boxes from the supermarket or liquor store for packing. Why does there always seem to be a surplus of these boxes? Because most corrugated containers are used commercially only once.
Food producers traditionally have shipped some items, such as milk and bread, in reusable crates. But most US consumer, wholesale, and industrial goods - some 90-95 percent - are transported in corrugated cardboard boxes. Most of these containers are used commercially only once. In 1990, US producers made 25 billion corrugated boxes - almost 100 for every person. These boxes accounted for 12.2 percent of the national municipal solid waste stream in 1990 and contributed 24 million tons of waste, or about 188 pounds for every US resident.
Packaging represents nearly one-third of the total solid waste stream, and materials used to transport goods (transport packaging) make up nearly half of packaging waste. So strategies that aim to reduce transport packaging can have a significant effect on the nation's solid waste burden. Delivering the Goods: Benefits of Reusable Shipping Containers examines the opportunities and obstacles involved in implementing one specific strategy for preventing the generation of packaging waste: reusing shipping containers.
Whether reusable containers are made of corrugated cardboard or of other materials, such as plastic, reuse provides opportunities to reduce the amount of material entering the waste stream and to lower a company's packaging costs. A company that makes shipments in single-use corrugated boxes can cut the quantity of container material needed for 1 million shipments by 50 percent if it uses those boxes twice; by 70.6 percent if it ships its products in reusable corrugated boxes that can be used five times; and by 98.5 percent if it switches from single-use corrugated boxes to plastic containers that can be used 250 times. As the total weight of container material represents the amount of material that, ultimately, must be disposed of or recycled, these reductions can be quite significant.
Apart from reducing waste generation, reusing shipping containers can lower a company's packaging costs. The initial cost of a single-use corrugated container is 95.2 percent less than the initial cost of a reusable plastic container. However, if the plastic container is used 250 times, the reusable container costs 91.7 percent less per use than the single-use corrugated container.
Through a series of company case studies, the report describes settings in which reusable shipping containers are used today, obstacles to their use, and options available to both industry and government for expanding their use.
Reuse as a source reduction strategy
Source reduction means a reduction in the amount and/or toxicity of materials entering the waste stream, prior to recycling, treatment, or disposal. Source reduction reduces the need for costly and time-consuming materials collection, handling, and processing operations. Besides preventing waste, source reduction conserves resources, including raw materials and the energy needed to extract, process, and recycle materials. It also reduces pollution arising from the manufacturing and recycling processes.
There are at least four ways to reduce transport packaging at its source, including: reducing the amount of material used in a container (lightweighting); selecting another material; packaging products in larger containers (bulk packaging); and switching from single-use to reusable containers.
The primary environmental benefits of reusing shipping containers are:
- waste prevention
- resource conservation
In addition to these environmental benefits, some of the companies profiled in Delivering the Goods report that reusable shipping containers have saved them money in the following areas:
- Reduced packaging costs. The purchase price of reusable shipping containers is generally higher than that of single-use containers. But over the course of their use, the cost per reusable container per trip is lowered - making reusable containers cheaper to use than single-use packaging.
- Reduced damage. Reusable containers are usually sturdier than one-way containers because they are designed to withstand multiple uses. So switching to reusable containers can result in lower rates of damage to goods and materials shipped.
- Reduced labor costs. Freeing workers from the task of breaking down corrugated containers and removing them from assembly-line operations can offer savings, because taking reusable containers off the line can be a much simpler process.
- Avoided disposal costs. Eliminating one-way containers eliminates the need to landfill or recycle them.
Standardizing reusable containers could add to these cost savings. Standard size boxes maximize space efficiency in trucks, enabling suppliers to ship more parts per delivery and thereby reduce total freight costs. Standardized boxes can also save labor time in assembly-line operations, because incoming goods do not have to be repacked into boxes that fit on the assembly line.
Physical properties of reusable shipping containers
Reusable containers of various materials may be designed with a number of features that facilitate shipping, handling, and storage, including:
- Collapsibility. The walls of the container are designed to fold down when collapsed.
- Nestability Empty. containers can be placed inside each other easily.
- Stackability. Tops and bottoms are designed to lock into one another to allow for greater stacking heights.
The first two features allow for a reduction in the space empty containers take up in transportation and storage and allow for more containers to be hauled back than were delivered full. Stackability makes it possible to maximize use of the full height of space in warehouses or delivery vehicles.
Four features of systems that foster reuse
Reusable shipping containers generally work best when the following features are present. These features are generally found in "closed-loop" distribution systems, in which the container always goes back to the same point of origin. These conditions may overlap:
- Short distribution distances Shorter distances mean lower freight costs are incurred in hauling back containers. Shorter distances also expedite the return of containers to suppliers.
- Frequent deliveries Frequent deliveries usually mean that inventory turns over rapidly, which makes it possible to collect empty containers with each delivery. This minimizes the number of containers in storage and transport and minimizes the supply of containers that a company must purchase.
- Small number of parties Controlling the return of empty containers is easier when the number of parties handling containers is small, for example, when a bakery delivers directly to a grocery store without intermediate storage in a warehouse.
- Company-owned or "dedicated" vehicles If companies involved in shipping and receiving use company-owned vehicles there is typically no charge for return shipping. Producers may also work with trucking companies that have dedicated part or all of their fleet to making deliveries to or from a single customer.
Five obstacles to expanding reuse
INFORM has identified five obstacles to expanding reuse of shipping containers:
- Investing in a large enough float of containers is expensive. Switching from single-use to reusable shipping containers requires a large initial investment. Reusable containers can cost 2-to-20 times more than single-use containers, and companies may need to start with one-and-a-half to three times as many because they need a steady supply of containers to compensate for those in transit.
- The cost of return freight to haul back empty containers may be prohibitive. Most product manufacturers do not own their own trucks but, instead, contract out to common carriers. After making deliveries, these carriers usually pick up additional loads for other companies. To accommodate a reusable container system, common carriers might have to change routes or add extra trucks to haul back empty containers - adding to the cost of such a system and possibly making it uneconomical.
- Tracking and accounting for containers may be difficult. In the supermarket industry, where thousands of different product lines may pass through a distribution warehouse or store, or in any common carrier distribution system, tracking individual companies' containers would be an added expense and administrative burden.
- Adequate storage facilities may not be available. The lack of secure storage space for empty containers may present another problem.
- Some companies are resistant to change. Companies that distribute goods may have long-standing relationships with packaging suppliers and may be reluctant to change purchasing policies. This is particularly true for smaller companies that lack procurement clout needed to influence packaging suppliers to change.
Industry and government options for promoting reuse
Industry options INFORM has identified six areas in which industry can act to promote reuse of shipping containers:
- Third-party leasing. Leasing standardized reusable shipping containers from a third-party company can reduce producers' packaging and associated disposal costs and can eliminate the administrative burden of tracking, handling, and hauling back empty containers.
- Industry-wide standardization. Within an industry, manufacturers can agree to use standard size containers. Standardization simplifies the reuse of packaging in a distribution system by reducing the number of containers any one company must purchase, eliminating the need to haul back containers to their original points of origin, and simplifying the sorting and tracking of individual container types.
- Cooperative efforts with suppliers. Manufacturers can work with their suppliers to develop reusable shipping container systems.
- Design. Companies can design containers that can be stacked and stored more easily, reducing storage space requirements and associated costs for reusable containers.
- Delivery systems. Adopting more frequent and direct delivery systems, such as "just-in-time" delivery, also eases storage space requirements.
- Working with business intermediaries. Local development corporations, small business development centers, and trade associations may play a role in encouraging industry standardization of shipping containers and cooperative efforts to work with suppliers.
Government policies. INFORM also has identified six types of government policies that alone or in combination could increase use of reusable packaging:
- Mandates. Government can require producers or shippers to deliver goods in reusable shipping containers. Government mandates may work best if designed with enough flexibility to encourage other types of packaging innovation, besides reuse, that would reduce material use - for example, selecting a different packaging material or adopting bulk packaging, then encouraging use of recycled content and recyclability. To facilitate such a mandate, government might also require each industry to use standardized containers so that companies could use each other's containers interchangeably, thereby reducing the number of containers any one company must purchase and eliminating the need to haul empty containers back to their points of origin.
- Economic incentives. Government can provide financial incentives that help industry switch from one-way to reusable containers, including tax credits, low-interest loans, and grants.
- Procurement. Government, which accounts for about 20 percent of US Gross Domestic Product, could use its purchasing power to require suppliers to ship to government facilities in reusable containers.
- Manufacturers' responsibility legislation. As seen with Germany's 1991 Packaging Ordinance, making industry financially responsible for managing packaging waste can encourage reuse of transport packaging.
- Materials policies. Establishing broad materials policies that aim to internalize the environmental costs of economic activity, such as taxes on raw materials or energy consumption, can give companies economic incentives for reuse as a strategy to reduce material or energy use.
- Incentives to reuse. Laws restricting waste management practices (such as landfill restrictions) may lead some companies to switch to reusable shipping containers.
Reusable shipping containers in manufacturing industries
In the United States, a number of manufacturers of automobiles, electrical and electronic goods, and appliances have worked with their suppliers to develop systems in which the suppliers ship parts in reusable containers. The development of just-in-time delivery systems has helped spur the use of reusables in manufacturing, especially in the automobile industry. Just-in-time (JIT) is a strategy that manufacturers use to reduce the amount of supplies kept in inventory by making smaller deliveries as needed.
One JIT operational technique bypasses traditional central receiving facilities, instead delivering materials as needed directly to the production line. JIT systems appear to work best when suppliers are located near manufacturing facilities; when the number of participants, including suppliers and carriers, is limited; and when all participants are committed to working together over a long period of time. Reusable container systems are compatible with JIT programs because containers can be moved into production facilities and then, almost immediately, moved out again.
Reusable shipping containers in the grocery and supermarket industries
In 1993 the food and beverage industry received more shipments in corrugated boxes than any other industry. Nearly 80 percent of grocery distributors and retailers have programs to recycle old corrugated cardboard, but about 30 percent of this waste stream still cannot be recycled because it is waxed or contaminated. inform has identified two kinds of distribution systems that are compatible with reusable shipping containers and one industry segment in particular that has shown increasing interest in reusables:
- Direct delivery from product manufacturer to store. Many grocery goods are distributed through warehouses, but direct delivery in reusable shipping containers is still common in the milk, baked goods, and soft drink industries and in cases where supermarkets run their own production facilities.
- Break-bulk operations. When individual stores order in quantities smaller than full cases of products, distributors may unpack bulk cases and repack products in smaller, reusable containers for store delivery.
- The produce industry. The waxed cardboard commonly used for produce currently cannot be recycled. So reusable containers can reduce retailers' disposal costs and also reduce growers' packaging expenses.
Incentives to reuse
The case studies in Delivering the Goods show that the opportunity to save money may be enough of an incentive for some companies to switch to reusable shipping containers. In other cases, the prospect of legislation that would restrict their current waste management practices has led companies to switch to reusable containers. Proposals are surfacing in Congress and in state legislatures to expand manufacturers' responsibility for products and packages to include the cost of recycling and disposal.
Whatever the impetus, INFORM has found that using reusable shipping containers can help companies on both the receiving and the shipping end of commerce improve their bottom line while lessening the nation's garbage burden