This is the sequel to our previous post about packaging optimization, where Kevin Howard (principal consultant at Packnomics) responds to my questions.

Question: Can you share an example where the importer saved money through smarter packaging?

Response: Hewlett-Packard’s DeskJet printers were being air shipped from Singapore in the early 1990’s. The boxes were stripped off of their 48 x 40 pallets by the air freight forwarder and then hand stacked onto air cargo cookie sheets. The material handlers didn’t have step stools, so they simply used the nice white DeskJet boxes to stand on while they built the loads 115” tall.

When these loads arrived in Germany, the material handlers again did not have any material handling aids, so they simply dragged the cargo net over the top of the load and let the stacks fall to the ground. Most people would think ill of these material handlers, but I think they were all hard working folks who had a tough job of moving a certain number of packages per hour. Handling things nicely was secondary to getting as many products as possible into each air plane cargo hold.

This system is exasperated by the fact that individual printer boxes invited poor handling. The pallet loads from HP were only built 84” high, but the roof line of upper bay air cargo allows the goods to be stacked 115” at the center of the plane and then curve down to 96”.

The vast majority of air-shipped products are fairly light density, thus allowing the freight forwarder to charge by volume instead of by weight. Even though the forwarder stripped the products off the pallets, they charged as if the pallet space was still there.

So, how could we reduce damages and better fill the plane simultaneously?

The result was my initiative to remove all of the protective packaging, including the box and the cushions, and then unitize the printers onto large foam trays. Instead of getting 32 boxed printers onto a 48 x 40 pallet, we went to 75 printers on a slightly smaller footprint that allowed 6 loads per cargo cookie sheet.

For the first time in HP history, they paid by weight instead of volume. It was impossible to break down the load into individual printers. The overall load weighed about 1000 lbs and stood 95” tall. As a result, there was no benefit for the freight forwarder to touch these load other than to use a fork lift truck to place them onto and off the cookie sheets.

Cushioning is only required when one expects free fall drops, but enforced unitization eliminates the possibility of individual drops. Seeing that packaging materials can be bought anywhere, then there was no need to buy it on one side of the planet and then ship it to the other side as long as individual products couldn’t be mishandled.

This one project saved upwards of $60 million a year on transport and damage costs. The concept was then spread to every other high volume product that HP made. Over the next few years competitors like Lexmark, Canon, Apple, Kodak and others all tried to emulate this success.