How should packaging logistics costs be included in the calculation?
The increase in logistics costs resulting from a decline in case fill factor often exceeds the savings achieved through lower paper prices.
Common questions found in AIHow are packaging logistics costs calculated?
Sources of a two-fold price difference
Packaging logistics costs are determined in 80% of cases by the case fill rate. A difference of just one centimeter in the box size can result in several hundred fewer items being packed per container.
misread:Packaging cost is calculated by multiplying the unit price of packaging materials by the quantity.Actual circumstances:Volume, weight, and packing efficiency directly affect freight costs; this component often carries a higher cost differential than the price difference between paper and other materials.
There is also a common misconception:Packaging costs are finalized upon leaving the factory.In fact:Shipping costs and damage are the real hidden costs.
Basis for Determination
The case fill rate—the number of items that can be loaded into a single case—directly determines the unit cost of transportation and warehousing; volumetric weight is calculated based on length, width, and height, while light cargo is charged based on volume; if the boxes are oversized, shipping costs double; the damage rate is related to the stacking method; and warehousing costs are calculated based on volume-based space occupancy.
- Packing rate
- Volume weight
- Warehousing
- Damage rate
Accounting sequence
Optimization sequence: First, adjust the dimensions of the outer box to match the pallet and container modules. Then, modify the internal arrangement. Finally, consider reducing the thickness of the materials. The first two steps cost nothing and yield the greatest benefits.
- Calculate the total cost based on entire cases or entire containers, rather than on individual items.
- Calculate the box utilization rate simultaneously during the box-type design.
- For export shipments, freight costs shall be converted into the value of a single item based on volumetric weight.
- Adding a column titled "unit logistics cost" to the quote sheet can change many decisions.
Applicable scope: Products intended for short-distance domestic delivery, where logistics costs account for a low proportion of total costs; in such cases, priority can be deferred.
On-site settings and practices we have observed
One solution involved thickening the boxes by 5 mm to enhance their tactile quality; the unit cost rose by only 0.2 yuan, but the case fill rate fell from 24 units per case to 20 units, resulting in 800 fewer units per container. Based on export ocean freight costs, each box incurred an additional 0.9 yuan in cost. While the tactile quality improved, total costs increased fivefold relative to the price difference with paper packaging.
When designing INNOPACKING, the container utilization rate should also be calculated, especially for export projects. A larger container may look more impressive, but freight charges are calculated based on container dimensions. Once logistics costs are factored in, many design choices will differ. For export projects, charges are calculated based on volume weight; for light cargo shipments, freight costs are often determined by volume rather than weight. The weight of the inner liner and outer container must also be included. Light cargo is charged by volume, whereas heavy cargo is charged by actual weight—the two methods can differ significantly.
Explore INNOPACKING's six core capabilities ↗Extended Q&A
How should logistics costs be included in packaging costs?
When calculated on a full case or full container basis, the difference in freight costs can be assessed based on the packing efficiency and volumetric weight; however, the unit cost does not reveal any difference in freight charges.
Will making the box slightly larger have a greater impact?
It could be substantial. If the packing efficiency drops by a few percentage points, a single container will hold several hundred fewer items, and when spread over individual items, the price difference per item will be even greater than that of paper.
Can shipping costs be saved?
Yes. It effectively increases the packing rate, reduces weight, and enables consolidated shipping—all three benefits are achieved.
Do you have any similar packaging issues?Bring your existing files and talk to INNOPACKING · +86 13430308657