The global supply chain is complex, fragile and subject to disruptions. The COVID-19 pandemic has strained the supply chain for the past few years, forcing businesses to adapt and deal with changes in packaging and logistics. One issue shipping companies must account for is the cost of shipping damage.
Items get damaged on their supply chain journeys quite frequently, but it hurts a business’s bottom line and can become expensive. Shipping damages can be costly. Discover some ways to prevent potential damage with your shipped items.
The Amount of Damaged Shipments
Packages and the goods inside them can get damaged at virtually any point in the supply chain process. Whether it’s on the conveyor belt of the production line or dropped on a customer’s doorstep, shipping damages happen relatively often.
According to Packaging Digest, around 11% of all goods arrive at distribution centers damaged. Most inbound goods are damaged after being compressed during shipping, where the lowest tier on a caseload is considered the most vulnerable or susceptible to damage.
3 Reasons Shipping Damage Is Expensive for Businesses
No business owner wants damaged goods showing up on a customer’s doorstep. Unfortunately, one poor shipment has a ripple effect throughout the organization. Here are some reasons why shipping damages are expensive for businesses.
1. Hurts Your Reputation
Customer expectations are changing — people want to buy high-quality goods at an affordable price and want them shipped immediately. The ultimate goal for any business is to meet these expectations, whatever it takes.
If a customer receives a damaged item, it can harm your company’s reputation. Why would they buy from you again if they had a poor experience? That one person might urge friends or family to avoid buying products from you in the future. These factors can negatively affect your company’s profitability and reputation within your industry.
2. Lost Sales
Companies will often provide customers with discounts if they receive a damaged product. These discounts are meant to keep customers satisfied, but it takes out a big chunk of sales and causes the cost of shipping damage to rise.
Take marketplace leader Amazon. In 2016, the company lost $7.2 billion due to shipping issues. The financial impact of damaged goods branches out to logistics, operational and production prices adding up, making it harder for companies to meet their bottom line.
3. Returns and Reverse Logistics
Damaged goods often return to where they came from, which means more work for the people involved in making, packaging, shipping and transporting the products. One damaged item can create heavier workloads for employees at every step of the supply chain.
Reverse logistics is a whole other ball game. There are millions of returned goods sent back to their original destination every year. According to the Reversed Logistics Association, nearly 20 vendors will touch a product once a customer initiates the process of returning their purchase.
It also takes more labor to repair, repurpose, repackage, replace and reship a damaged good. Receiving a returned item is a frustrating experience for members of the supply chain, much in the same way it’s a hassle for customers to return an item.
4 Common Causes of Shipping Damage
Various accidents can happen throughout the supply chain that damages packages. What are the most common causes of shipping damage?
Climate and Weather Events
Shipping goods through areas with extreme temperatures, natural disasters or harsh winters can cause severe damage to products. The climate changes drastically from state to state, meaning most shipments will be in a location with colder or warmer temperatures. These changes can damage the product and render it useless by the time it reaches its destination, depending on what it is.
Another common cause of shipping damage is improper packaging. Shipped items must fit well in their packaging in order to reduce the chance of harming them. During transportation, caseloads shift from side to side or bounce up and down after going over bumps on the road. Improperly packaged items will follow suit and are more likely to break or shatter if they’re fragile.
When someone orders an item and pays for shipping, their purchase goes through many pairs of hands before it arrives. If each handler is careful, there should be little to no damage to the item shipping. However, if a driver, handler or warehouse employee handles packages carelessly, it can lead to a dangerous situation or cause damage to the product.
Wrong Storage Methods
Some items need to be kept in temperature-controlled storage spaces. Food and perishable items are the best examples of this. Shippers know certain foods — like fruit and vegetables — must be stored in a cold environment to stay fresh. When items ship in extremely warm or cold temperatures, they can become damaged.
How to Avoid Shipping Damages
Businesses with good shipping practices often prevent damage, saving money in the long run. Here are some tips to help organizations ensure products reach their destination unharmed.
Invest in ISTA
The International Safe Trading Association (ISTA) is a member-based non-profit organization focused on minimizing product damage throughout the supply chain. Companies can leverage ISTA test labs — facilities designed to predetermine if packages will become damaged during shipping.
Use Protective Materials
Another way to protect product integrity is to use protective coatings and sealants, such as epoxies and polyurethane coatings. Manufacturers often use coatings and sealants to keep their products from getting damaged before it reaches the consumer’s hands.
It may seem obvious, but providing employees with the proper training to handle packages carefully can go a long way in preventing damage. Employees should handle products — especially fragile ones — with care to ensure it arrives to customers safely.
Reduce the Cost of Shipping Damage With Improved Techniques
Because damaged shipments are very common, it’s somewhat unrealistic to think a company can avoid reverse logistics or repackaging products entirely. However, following the tips above and using the latest technologies — such as automated warehousing solutions — can help reduce the chance of damaged shipments.
Emily Newton is the Editor-in-Chief of Revolutionized. She regularly covers trends in the industrial sector.