A new economic case study from the Corrugated Packaging Alliance (CPA) demonstrates a 25% annual cost savings from shipping tomatoes in corrugated versus shipping the same volume of tomatoes in reusable plastic containers (RPCs).
Using data provided by a large grower in Mexico, a transparent software-modeling tool was used to analyze total annual costs for using corrugated containers versus RPCs to ship 144 million pounds of Roma tomatoes to Houston. Results of the detailed, activity-based accounting comparison show that corrugated saves $6.8 million annually versus using RPCs.
The analysis reveals that RPCs incur $7.5 million more in trucking and handling costs than corrugated, due to RPC backhaul trip requirements, handling costs at return distribution centers, plus washing costs and higher trucking costs from farm to retailer to distribution center. At a conservative estimate of $0.10 per container, washing alone adds $577,000 to the annual cost of using RPCs.
Corrugated containers are recovered for recycling after use at retailer locations. Supermarkets have helped propel corrugated recovery to 91% in 2012. A significant part of the savings from using corrugated in this case scenario comes from avoiding the $4.1 million in costs for shipping, handling, and washing RPCs in their return cycle.
“Grocery retailers are looking to improve profits by reducing costs throughout the entire distribution channel. Transportation packaging is one area that retailers scrutinize for possible cost savings,” says Dennis Colley, executive director of CPA.
In this case scenario, both growers and retailers save money when corrugated containers are used to ship tomatoes. A study of the data using a special rental analysis module in the software shows that, in a typical leasing arrangement, the retailer pays $3.5 million (17%) more to receive Roma tomatoes shipped in RPCs as opposed to corrugated. The grower pays $893,000 (12%) more to ship in RPCs. So, not only are the total costs higher, but the retailer also shoulders a higher cost increase to use RPCs.