A seemingly small detail that can unknowingly escalate SME logistics costs is focusing primarily on product price and transportation costs, while overlooking a crucial factor directly impacting expenses: product packaging. Most entrepreneurs prioritize distance, weight, and shipping method, but in practice, packaging is a significant factor affecting costs and often results in actual shipping costs exceeding estimates.

This article from SME Shipping will explore why packaging has a greater impact on shipping costs than you might think, and how overlooking packaging can lead to accumulated hidden costs and negatively affect profits.

1. Shipping costs are calculated based on the higher weight, not just the weight of the product itself.

International transport systems will consider the higher weight used to calculate the service fee.

• Actual weight of the product
• Volumetric weight derived from packaging dimensions.

If the packaging is larger than necessary, even if the product itself is lightweight, the shipping cost will increase immediately.

2. Inappropriate box sizes directly affect shipping costs.

Choosing a box that is larger than the actual product increases its volume unnecessarily, resulting in a higher weight used to calculate shipping costs. In many cases, this leads to increased shipping costs that do not reflect the value of the product but are simply due to the empty space in the packaging.

3. Cushioning materials add both weight and volume.

Cushioning materials are essential, but excessive use increases both the actual weight and size of the box, resulting in higher shipping costs without significantly improving product protection. Therefore, appropriate packaging should consider the characteristics of the product, not just be a precaution.

4. Substandard packaging increases cost risk.

Improper packaging can lead to product damage, duplicate shipments, complicated or rejected insurance claims, and these costs are often not factored into the selling price but directly impact profitability.

5. Packaging affects the warranty and shipping conditions.

Insurance companies and shipping providers may consider packaging as part of their risk assessment. If packaging does not meet standards, additional fees may be charged, or the package may not be covered under the insurance policy.

Guidelines for SMEs to control packaging costs.

• Choose packaging that is appropriate for the size and weight of the product.
• Use cushioning materials only when necessary.
• Test the packaging before actual shipment.
• Consider designing packaging that takes transportation into account, not just marketing.
• Consult a logistics expert to estimate the actual costs.

Packaging is not the final step of the sales process, but rather a part of logistics cost management. Therefore, focusing on packaging from the beginning can help reduce unnecessary shipping costs, mitigate risk, and lead to more accurate pricing.