With the current high price and looming price increases associated with packing materials, what are some ways we can remain profitable with our packing services?
By Lakelan Fennell
Packing materials, like many commodities, have seen dramatic price increases in 2021. Pulp, paper and allied products (wood pulp) have seen a 51% increase since December of 2020. These higher commodity prices have lead to drastic increases in the price of packing materials that movers use every day. There are, however, some very effective ways we can manage these increases from the cost side of the business.
- Shop packing material providers. It is always good to maintain a relationship with at least two packing material providers. Sometimes one will pass on less of an increase than the other which leads to savings when using one provider over the other. Remember there is also a balance between price and service. The cheapest provider may not always be the one that can handle short notice orders, and in some cases they may run out of cartons during peak times.
- Fall in love with good used packing materials. This can be a huge cost saver for any DAB mover. On many types of DOD shipments, a mover can use used packing materials. Rule of thumb, if the items in the carton have touched a customers person (towels, clothes, sheets, etc) then the carton cannot be reused. This usually means dishpacks, book cartons, medium cartons, picture cartons, lamp cartons, TV cartons and paper pads can all be reused. Do as many debris pickups of good material that you can economically handle. Train your crews to break down good used packing material when unpacking, INCLUDING SAVING PAPER PADS FROM INTERNATIONAL DELIVERIES. Many times furniture on international shipments are double and even triple wrapped in paper pads and can easily be unwrapped in such a way that the paper pads can be reused. Make sure all previous markings on the cartons are obliterated so new, proper carton labeling can be accomplished and there is no confusion as to the contents or other identifying information.
- Make sure your crews utilize the used packing materials. Used packing material is only beneficial if the crews actually use them. These materials can be used on Code 4, Code 2, Code D and DPM shipments. Make sure the pack crews take the used materials first, before the new material. Some companies will put the new material out of direct reach of the crews until the used material is exhausted. Most of the time, pack crews will take whatever is easiest to get in the mornings, make sure the used material is easier to get their hands on.
- Use Just In Time (JIT) ordering strategies. Packing materials can put a large strain on cashflow for any mover. With packing invoices coming net 30 days from the date of delivery to the warehouse, and many times the bill to the customer is not being paid for 60-90 days after the packing service is completed, there can be quite a large gap from cash out to cash in. Ordering weekly can help close that gap. If possible, order every week for just what you foresee the need to be the following week. This accomplishes a few things. It prevents the mover from paying additional “holding fees” for packing material to as little time as possible from time of receipt to the time of use. It can help stop over ordering of materials. Pack crews can sometimes overuse packing material when there is too much on hand. Materials can be left at the residence or on the trucks which drives costs up.
- Monitor packing material usage and inventory. This goes hand in hand with the JIT ordering strategies previously addressed. Always know your exact current on hand inventory when placing the weekly order so you do not order more than you need for the next week. Having someone in the warehouse responsible for pulling packing material for the next day’s orders can also be very beneficial. Make sure the amount of packing materials being sent out to an order are not excessive to the order size.
Packing materials are an ever increasing cost for movers. Taking some time and focusing on your packing material usage and managing it effectively can lead to tremendous cost savings.