Story excerpt provided by Crain’s Cleveland Business.
Written by Judy Stringer.
Automotive suppliers have a problem.
Yes, there is the uncertainty surrounding renegotiation of NAFTA and unrelenting increases in raw material costs. But this problem has to do with boxes or, more specifically, returnable shipping containers that are, well, not returned.
The nonprofit Automotive Industry Action Group (AIAG), headquartered in Southfield, Mich., estimates that the automotive industry shells out more than $750 million annually to cover the issues related to reusable packaging and pallets in North America alone. That includes the direct cost to replace lost containers as well as softer costs, such as the lag in production when a reusable box container is not available and the incremental price of cardboard or other disposable packaging needed to temporarily replace missing reusables, according to Lang Ware, AIAG director of supply chain products and services.
Adding to the expense, Ware said, is the increased risks for damage from the use of expendable packaging. Many automotive components have very specific packaging requirements to protect them during transport. Often, the disposable version of the packaging is simply not as effective.
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Originally published September 17, 2017.