Learn how to measure Total Cost of Ownership (TCO) across shipment cycles by analysing lifecycle costs, reuse rates and hidden logistics expenses. Discover how reusable packaging can reduce long-term costs, damage risks and operational inefficiencies.
Summary of this article
When investing in industrial packaging, you probably focus primarily on the purchase price. But that initial outlay is just the tip of the iceberg. The true costs of your packaging strategy unfold over multiple shipping cycles, and without a thorough Total Cost of Ownership analysis, you’ll miss out on crucial insights that could make or break your budget.
Measuring TCO across multiple shipping cycles helps you make smarter decisions about reusable versus disposable packaging, optimal maintenance schedules and the true value of sustainable packaging solutions. Let’s take a look at how to approach these calculations in practice.
Total Cost of Ownership in packaging and logistics is the sum of all costs incurred throughout the entire lifecycle of a packaging solution, from purchase to disposal. This includes not only the initial investment, but also operational costs, maintenance, repairs and end-of-life processing.
A TCO analysis goes beyond the visible costs shown on your invoice. For example, it calculates how much you save when reusable flight cases last for 50 shipments, rather than buying 50 cardboard boxes. Or how much extra you pay for damaged products because you opted for cheaper protection.
In practice, this means mapping out all cost categories: purchase costs, transport costs per cycle, storage costs, labour costs for packing and unpacking, insurance premiums, damage costs and waste disposal. This holistic approach gives you insight into where your packaging choices are actually making or losing you money.
You calculate TCO across multiple shipment cycles by dividing all costs by the number of expected usage cycles of your packaging. Start by adding up purchase costs, maintenance, repairs and end-of-life disposal, and divide this by the total number of shipments over the packaging’s lifespan.
Here’s a practical approach: take a €500 reusable shipping case that lasts for 100 shipments. Add €100 in maintenance costs over its lifetime. The packaging cost per shipment is then (€500 + €100) / 100 = €6 per shipment. Compare this with disposable packaging costing €15 per shipment and you’ll immediately see the difference.
Don’t forget to factor in the time value of money in your calculation. Money you invest today in reusable packaging has a different value than savings you’ll realise in three years’ time. Use a discount rate that suits your business to discount future savings back to their present value.
Start by gathering all cost data per shipping cycle. Document purchase prices, expected lifespan, annual maintenance costs, repair frequency and labour costs for handling. Also include information on damage rates and the associated costs.
Next, calculate the cost per shipment by dividing all lifecycle costs by the number of expected shipments. Compare different packaging options based on these standardised costs per shipment, not just on the purchase price.
Hidden costs in a TCO analysis include labour costs for packing and unpacking, storage space for empty packaging, insurance premiums, return logistics, product damage due to inadequate protection, and compliance costs for regulated sectors. These costs often remain hidden in standard accounts.
Labour costs are a major expense that companies often underestimate. For example, it takes longer to remove a product from complex packaging than from a well-designed solution. Calculate how much time your staff spend unpacking and repacking per shipment and multiply this by their hourly rate.
Storage costs for empty reusable packaging can be significant, especially if you have limited warehouse space. A stackable transport case saves space and therefore money compared to non-stackable alternatives. Calculate the number of cubic metres per empty package and multiply this by your storage costs per cubic metre.
Insurance premiums often vary based on the protective quality of your packaging. Better protection can justify higher premiums due to lower damage rates. Ask your insurer about the impact of different protection levels on your premium.
Reusable packaging reduces TCO by spreading the purchase cost over multiple shipping cycles, but increases the initial investment and introduces maintenance and return logistics costs. The net effect depends on the number of reuse cycles and the cost structure of alternatives.
The break-even point for reusable packaging is usually between 5 and 15 shipments, depending on the cost difference compared to disposable alternatives. A €400 flight case used 20 times costs €20 per shipment, excluding maintenance. If disposable packaging costs €35 per shipment, you recoup the investment after 14 shipments.
Return logistics is a key factor in the TCO of reusable packaging. You need to calculate the costs of returning empty packaging to your site. Sometimes, an efficient return network offsets these costs through optimised routes and the consolidation of return shipments.
Maintenance and repairs are predictable costs with reusable packaging. Allow for approximately 5–10% of the purchase value per year for maintenance, depending on the intensity of use and transport conditions. Preventive maintenance is cheaper than repairs following damage.
At Faes, we see total cost of ownership as more than a calculation of purchase price, transport costs and replacement cycles. In practice, the real value of a packaging solution depends on how well it performs throughout the entire logistics process: from handling and storage to repeated transport, maintenance, inspection and reuse.
That is why we approach packaging development from both a technical and operational perspective. Our teams combine expertise in custom engineering, packaging design, production, assembly, testing and specification. This helps us look beyond the case itself and assess how the packaging functions within the customer’s wider process.
For organisations working with sensitive, valuable or mission-critical equipment, this can make a significant difference. A reusable packaging solution must not only protect the product, but also support efficient handling, meet relevant requirements and remain reliable across multiple shipment cycles. By applying our in-house expertise early in the development process, we help customers make packaging choices that are practical, robust and aligned with long-term operational use.
Track costs per shipment, the number of reuse cycles per package, damage rates, annual maintenance costs and return logistics costs to monitor TCO performance. These metrics provide insight into actual performance versus your original TCO calculations.
Cost per shipment is your most important KPI. Calculate this monthly by dividing all packaging-related costs by the number of shipments. Track the trend over time to see if your TCO is improving due to economies of scale, learning effects or process optimisations.
The number of reuse cycles shows whether your packaging is achieving its expected lifespan. If reusable cases break after 15 shipments when you had anticipated 25, you need to adjust your TCO calculations. Also document the reasons for failure: wear and tear, damage or loss.
Damage rates measure the effectiveness of your protection. An increase in product damage may mean that cheaper packaging ultimately works out more expensive. Track both the percentage of damaged shipments and the average cost of damage per incident.
At Faes, we help businesses with packaging management solutions that optimise the total cost of ownership. We analyse your current packaging costs, design reusable solutions that fit your logistics processes, and monitor performance to achieve continuous improvement. This way, you transform packaging from a cost centre into a strategic advantage.
Begin by collecting data for your most frequently used packaging types over the past 6-12 months. Focus on three key data points: purchase costs, number of shipments, and any damage claims. Start with a simple spreadsheet to track costs per shipment, then gradually add more detailed cost categories like labor and storage as you become more comfortable with the process.
The most common mistake is only comparing initial purchase prices without factoring in the full lifecycle costs. Many companies also underestimate labor costs for packing/unpacking and forget to include the cost of storage space for empty reusable packaging. Always calculate the true cost per shipment rather than just looking at upfront investments.
Review your TCO calculations quarterly for critical packaging types and annually for less frequently used solutions. Trigger immediate recalculations when you notice significant changes in damage rates, shipping volumes, or when suppliers change their pricing. Market conditions and your operational efficiency both evolve, so your TCO analysis should too.
TCO analysis is valuable regardless of shipment volume, but the approach differs. For low-volume operations, focus on cost per shipment and prioritize packaging solutions that reduce damage claims and labor time. Even if you only ship 10 items per month, choosing the right packaging can significantly impact your margins and customer satisfaction.
Build inflation assumptions into your TCO model using historical inflation rates for relevant cost categories (typically 2-4% annually for materials, 3-5% for labor). Update your discount rate annually and recalculate TCO when inflation significantly exceeds your assumptions. Consider creating best-case, worst-case, and most-likely scenarios to understand the range of potential outcomes.
First, verify your assumptions about reuse cycles and hidden costs - you might be underestimating the lifespan or overestimating maintenance costs. If the analysis still favors disposable packaging, focus on optimizing your current solution by negotiating better rates, reducing packaging waste, or improving damage prevention. Sometimes hybrid approaches work best, using reusable packaging for high-frequency routes and disposable for occasional shipments.
Track your cost per shipment before and after implementing TCO-based decisions, and measure changes in damage rates, labor efficiency, and customer satisfaction scores. Calculate the payback period by dividing the initial investment in new packaging or systems by the monthly cost savings. Most companies see ROI within 12-18 months when they properly implement TCO-driven packaging strategies.
Thijs Canjels is Business Innovation Manager at Faes and specializes in packaging management and supply chain optimization. In his blogs, he shares insights on efficiency improvements, cost savings and the strategic role of packaging in modern supply chains.
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