In the realm of supply chains, a significant shift is underway that might have escaped your notice. It’s a revolution centered on the size and density of packages and shipments. In fact, it boils down to two main forces driving this change. First, transportation carriers are more frequently billing shippers based on their shipment dimensions, not the actual weight or weight class. Second, there is an increasing concern by all of us that shipment packaging contributes to CO2 emissions. Thus, more and more shippers are beginning to look at package dimensions and how to reduce air in their shipments as well as reduce CO2 emissions. 

In this article, I’ll look at how dimensional pricing and sustainability priorities are driving changes in how supply chains ship products. Additionally, I’ll share with you how package engineers, software, and even robotics can help supply chains implement optimal packing solutions for packing parcels as well as for loading pallets, and trucks.

1. Transportation Carriers Are Adjusting Their Pricing to Align With their Fleet’s Cargo Space Dimensions.

Transportation carriers are changing their pricing models to better reflect the spatial economics of their fleets. It’s no longer just about the shipment’s weight or weight class when it comes to pricing. Now, carriers are billing increasingly more shipments by their dimensions rather than by actual weight. The carriers are doing this because the square footage of their cargo space more directly reflects their costs for moving freight. Thus, carriers are leveraging sophisticated algorithms based on package dimensions to price shipments. For instance, below is a simple description on how package dimensions are determined that in turn drives pricing for a typical parcel carrier such as UPS FedEx, or USPS.

How Dimensional Weight Is Calculated

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• First, Measure the length (L), width (W), and height (H) of the package in inches, rounding up to the nearest whole number.
• Then, Calculate the Billed Weight by multiplying L X W X H divided by the carrier’s dimensional (DIM) factor, then round up. If this dimensional weight is higher than the actual weight, this then becomes the billed weight.

Now, this is a very simplistic explanation of package dimensional pricing and does not fully address additional package handling charges triggered by girth, height, and distance (zone). Surprisingly, some of these accessorial fees can exceed the price of the package charge. For more details on DIM pricing and package handling fees, see my article, Large Package Shipping Mistakes And How To Ship More Cheaply and ShipBob’s article, DIM Weight Calculation: How to Calculate Dimensional Weight Pricing.

2. How Reducing Your Package Dimensions Lowers Both Shipping Costs and CO2 Emissions.

Diminishing the footprint of your packaging is a dual victory; it’s a win for your wallet and a win for the environment. Shrinking package dimensions can also lead to a cascade of cost savings across the logistics spectrum, from reduced material usage to lower freight charges. Moreover, this reduction in package size leads to denser shipments, allowing more products to be transported using less vehicular assets. Thus, this in turn slashes CO2 emissions.

a. Use of Sustainable Packaging to Reduce Costs and CO2 Emissions.

Without a doubt, sustainable and smart packaging is crucial for reducing shipping costs and environmental impact. This involves optimizing product packaging components like inserts, tape, and labels to minimize emissions and package size. Also, shippers need to evaluate the dimensional impacts of shipment packaging on size and density, from small parcels to full truckloads, including elements like cardboard boxes, pallets, and dunnage.

So, the types of materials that are used to both protect and contain a shipment order can greatly affect sustainability as well as costs. For a more detailed discussion on sustainability packaging, see Radial’s article, Love the Earth: 9 Ways eCommerce Retailers Can Create Impact with Sustainable Packaging and Econenclose’s article, Right-Size Your Sustainable Packaging.

b. Reduce Air in Boxes to Reduce Costs and CO2 Emissions.

Minimizing the amount of air in a shipment will substantially cut costs and CO2 emissions. For instance, according to paccurate the average shipment contains up to 64% air in some product categories. Undoubtedly, most of us have had a real-life experience with this phenomenon. For instance, many of us have experienced a surprise when receiving and opening a large parcel only to find a single small item inside. Indeed, this is inefficient and costly, and does not reflect well on the shipper. Moreover, because there is so much air in many shipments, this results in more trucks on the road emitting more CO2. Undeniably, reducing air in shipments would greatly diminish shipping expenses and environmental impact.

3. Packaging Engineers, the Experts in Product and Shipment Packaging.

Traditionally, supply chains have treated packaging engineering as a back-office function where their expertise is needed from time to time. In fact, most package engineers focus primarily on packaging for new products and not as much on shipment packaging. Now with the growth of ecommerce, there is an increasing need for their services in the area of shipping, especially parcel shipping. For those of you that are not familiar with packaging engineers, they have interdisciplinary skills to include industrial engineering, marketing, package science, and even graphic design. For more information on package engineers, see PackHelp’s article, What is a packaging engineer and why you should work with one.

In the last couple of years the role of packaging engineers has expanded due to the rise of ecommerce and carriers’ increased use of dimensional pricing. Traditionally, package engineers solely focused on protecting products at the least cost. Now, they must also minimize empty space in packages and create attractive packaging for consumers.

4. Cleaning Up Your Master Items List: The Dangers of Garbage In, Garbage Out (GIGO) with Package Dimensions Data.

Data integrity is crucial for effective supply chain management, particularly when it comes to packaging dimensions. Without a doubt, inaccurate or outdated dimensions in a master item list will lead to inflated shipping costs and operational inefficiencies. This is because bad data will wreak havoc on packing optimization efforts. Its a case of “Garbage In, Garbage Out”. To optimize shipment packing, warehouse and order fulfillment operations need an accurate master item list, which is essential for both cartonization and palletization, whether automated or manual. These processes are defined below:

Cartonization and Palletization Definitions

• Cartonization is a process that determines the best way to package an order by evaluating the items in it and choosing the right size, type, and quantity of containers.
• Palletization is the process of stacking goods onto a pallet for shipping, storage, and transportation. 

Additionally, these packing optimization processes need more than just accurate weight and dimensions. For example, below are the types of data element characteristics needed in an item master for packing optimization:

Master Item Data Needed for Packing Optimization

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• Product Dimensions. This includes the length (L), width (W), and height (H).
• Unit of Measure (UOM). For instance, is the product measured in inches or centimeters?
• Master Case and Inner Pack. This is essential for both efficient storage and picking strategies.
• Piece Configuration. This is key for both picking and packing. Need to know how individual items are arranged within cartons.
• Cartons per Pallet and Layering. This is key for optimal palletization for less-than-truckload (LTL) and truckload shipments.
• Specialized Fields. Especially for shipping, this can include attributes such as temperature control requirements, expiry dates, hazmat classification, and country of origin.

For a more detailed discussion on the importance of the accuracy of the master item list for shipping, see OPS Design’s article, ITEM-MASTER DATA ACCURACY: THE BASIS OF SUPPLY CHAIN EFFICACY and PackChain’s solution, Perfect Item Master.

5. The Bin Packing Problem: Tech to Optimize Package Packing, Palletization, and Truck Loading.

The Bin Packing Problem (BPP) is a mathematical challenge that logisticians face when packing a box, a pallet, or an entire truck. In particular, the objective of BPP is to pack a set of items into a minimum number of “bins” (containers). Over the decades, mathematicians have developed several mathematical solutions to the Bin Packing Problem.To stay competitive, logistics operations need to use an optimal bin packing strategy that leverages packaging expertise and technology. As a result, this will save money, improve efficiency, and reduce environmental impact.

a. Packing Optimization Seems Easy, But Is It?

Packing a box may seem straightforward, but it involves numerous variables, trade-offs, and evolving technologies that require great expertise. Even with reliable master item data and software, developing an optimal packing strategy requires careful consideration. To illustrate, below are some things to consider prior to implementing a bin packing solution.

Bin Packing Considerations

• Sizes of Containers. For example, an operation may only have a small and large box, or dozens of shipping container types. 
• Sizes of the Items to Packed. Here a shipment order could consist of any combination of 5 SKUs or even 20,000 SKU combinations for one container.
• Additional Packaging Needed. For example, a frozen food package may need more ice packs for delivery across the country in the summer.
• Weight Constraints. Here a box may have a 25 lb weight limit.
• Loading / Unloading Sequence. This is a key criteria for loading a truck with multiple stops.
• Delivery Considerations. For instance, a pallet would not work for a residential delivery.
• Dimensional Pricing Considerations. Instead of incurring a large package charge, it is best to break the order into multiple boxes.
• Stacking Limitations. For instance, don’t place a bag of marshmallows on the bottom of a box.
• Foreknowledge of Items to Pack. In some cases, such as loading a truck or pallet the loader (manual or automated) the “loader” may only have foreknowledge of some of the items to pack. It is only later in the packing process that the other items to pack become known.

b. Need Both Tech and Expertise Tailored to Your Particular “Bin” Packing Problem.

Based on the variables listed above, the technology available, facilities, and cost consideration will determine what type of bin packing strategy you should implement. Indeed, the solution you pick could be completely manual, software-assisted, or completely automated. Further, there is a full range of software and associated BPP algorithms that you can use based on your situation. For instance, there are algorithms based on mathematical optimization, reinforcement learning / ML, and that are rules-based. All of these types of solutions are applicable depending on your situation. 

For more readings on The Bin Packing Problem (BPP) as it applies to shipping, see these articles:

• Amazon: How Amazon is using AI to deliver customer orders with less packaging
• Aaxis: Optimizing Ecommerce: Solving the Bin Packing Problem
• ShipperHQ: Dimensional Packing: Packing Products into Boxes (Best-Fit)
• anylogic: Solving the Bin Packing Problem in warehousing and logistics – strategy comparison
• Optioryx: 3D Bin Packing: The Tetris of Logistics

6. Robotic Shipment Packing: The Future Looks Bright If the Data Is Right.

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As shippers realize that the quality of their master item data is the linchpin to optimal load packing, the sky can be the limit to automating packing solutions. With quality data and the right set of cartonization algorithms, the next step is to leverage more automation and robotics. 

Without a doubt, the potential for robotics to pack boxes, pallets, containers, and truck trailers is unlimited. With the right data and software, robotic systems can transform the packing process, making it faster, more accurate, and less prone to human error. At the same time, this will take a lot of work to make it happen. This is because robotic packaging systems require human oversight and exception handling to maximize throughput and minimize downtime. For more discussion on robotic packing, see Modern Materials Handling’s article, Robots edge into packaging.

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Need help with an innovative supply chain solution that leverages emerging information technologies? I’m Randy McClure, and I’ve spent many years helping logistics organizations to make the most of new information technologies. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in new strategies, proof-of-concepts and operational pilot projects using emerging technologies and methodologies. If you’re ready to supercharge your supply chain or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

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