As e-commerce continues to grow, a new study of UK logistics companies indicates online shopping logistics is putting unprecedented cost pressure on their operations.
The study revealed that 21 per cent of logistics firms surveyed identify the biggest challenge over the next 1-2 years as being the rising logistics costs from handling online shopping.
These rising costs – from packing, processing and delivery, including returns from damage – are putting sharp increasing cost pressure on logistics companies according to the recent survey by packaging company Antalis Packaging.
Overall the total packaging cost (including corrugated box, tape, bubble wrap etc) can vary between 1-2 per cent of the the product value in the case of re-packed products, according to industry estimates. The cost of packaging for already packed goods can be 1.0 per cent of the product value.
Nearly 33 per cent of respondents – including businesses that operate up to 3,200 distribution sites across the UK – said that as a result,they are now looking to improve their packaging recycling rates, as well as adopting more eco-friendly packaging.
Andrew Smedley, head of e-commerce and logistics packaging at Antalis Packaging, says: “With latest figures showing that 20p in every pound is now spent online, it’s unsurprising that many logistics firms are struggling to deal with the mounting costs associated with the packing, processing, and delivery of a record number packages to UK homes.
“To keep these costs down, many will be looking at ways to optimise existing processes and drive efficiency in the supply chain and packaging is often a great place to start,” says Smedley.
“From our research, we’re seeing a discernible shift towards more environmentally friendly business decisions, including a greater number of firms that are actively taking steps to recycle up to 80 per cent of their packaging by 2020 and 100 per cent by 2022. As such, this will no doubt drive investment in not only eco-friendly, but also smarter packaging solutions aimed at cutting out excess materials and improving protection from damage,” he adds.
And within the last 12 months, 76 per cent of logistics firms surveyed revealed that they had changed the packaging of one or more of their products, acknowledging that adapting their packaging strategy in-line with the developing market has proved beneficial to their business.
Supplier issues, rising costs and damage/loss of product were named as the most common reasons behind a change in packaging, as half of firms surveyed said the move had led to improvements and significant cost reductions.
And 20 per cent of those polled said they are interested in smarter packaging to improve sustainability, reducing the level of plastics in their packaging and improving their customer experience.
Addressing another key area, 17 per cent of respondents, said preventing the rising level of damages associated with online purchases was a focus for the year ahead.
“The logistical environment is fast-evolving and competitive and increasingly every resource and square footage used has to demonstrate good value for money,” Smedley adds.
“It’s no different for packaging and it’s heartening to see that firms are reaping the rewards of adapting their packaging to meet market conditions and achieving significant cost savings as a result.”