Using corrugated containers saved tomato growers $6.8 million annually vs. using reusable plastic containers (RPCs), according to data provided late last year by a large grower in Mexico, as calculated using a transparent software-modeling tool. The study analyzed the costs of using corrugated containers vs. RPCs to ship 144 million pounds of Roma tomatoes to Houston, TX.
The analysis reveals that RPCs incur $7.5 million higher 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 DC. 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, the study noted. It added that supermarkets have helped propel corrugated recovery to 91 percent in 2012, maintaining corrugated’s position as the most recycled packaging material in the world. A significant part of the savings from using corrugated in this case scenario comes from avoiding $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,” said Dennis Colley, executive director of the Corrugated Packaging Alliance. “Transportation packaging is one area that retailers scrutinize for possible cost savings.”
Both growers and retailers save money when corrugated containers are used to ship tomatoes in this case scenario. 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.
Initial arguments to justify the use of RPCs vs. corrugated were based on the idea that RPCs were more economical because they were reusable. Case studies, like this one, detail the impact of major cost sensitivity factors on the total distribution system.
The Roma Tomatoes Case Study is available for download on the Corrugated Packaging Alliance (CPA) website.