Continuing growth in e-commerce has pushed packaging giant Sealed Air to invest $1.5 million in Louisville in a partnership with UPS to help business customers cut freight costs and to make sure that online customers get their products on time and in one piece.
The North Carolina-based packaging company (and maker of Bubble Wrap), is leasing 6,000 square feet from UPS near Worldport, to showcase the two partners’ capabilities, which include reducing packaging and labor costs thanks to more durable packaging and greater automation.
The companies on Tuesday displayed 15 mock production lines of Sealed Air equipment in a UPS warehouse near the airport to show existing and potential customers how they could save on packaging and labor force expenses. Sealed Air officials said the lines served only marketing purposes and that the center’s employment would be minimal.
E-commerce sales accounted for 8.3 percent of total U.S. retail sales in the fourth quarter of last year, about double the share from six years earlier, according to statista.com.
By 2020, Ken Chrisman, president of Sealed Air’s Product Care Division, predicted the share would approach 20 percent.
Customers increasingly expect to be able to order anything online and have it shipped to their front door, he said. And customers’ expectations are rising: They want packages to arrive on time, without errors and in pristine condition.
With an ever-more crowded marketplace, delivering on those expectations is critical to gaining and retaining customers, Chrisman said, because significant numbers say that they will avoid retailers that make mistakes on orders or send damaged goods.
Officials from Sealed Air and UPS said they hoped the new Packaging Innovation Center would enable them to gain business customers by showing them that the two partners could handle all aspects of packaging and logistics.
At a station in the packaging center, employees of both companies on Tuesday praised the advantages of Sealed Air’s StealthWrap, which envelops product boxes in 29 layers of very thin but durable film.
StealthWrap primarily will be used for products that already arrive in boxes, such as shoes, and eliminates the need for additional packaging such as corrugated boxes, Sealed Air officials said. The wrap reduces material costs, cuts down on labor — because employees do not need to physically place the shoe box in the corrugated box — and lowers shipping costs because using wrap rather than another box reduces the cargo’s weight and size. UPS officials said a StealthWrap machine can prepare 20 packages per minute or 19 more than a human can handle.
And, they said, automation also can help logistics companies overcome their struggles to find enough human help, especially from Thanksgiving to New Year’s.
“That peak season capacity is really challenging,” said David Hanrahan, VP of strategic accounts at Sealed Air.
Wrapping the boxes in thin film — rather than more boxes — also addresses logistics companies’ space constraints, as the ever-increasing demand for home deliveries is filling their planes, semi-trailers and box trucks.
Even small savings per package can add up quickly: UPS ships about 19 million packages and documents every day. Sealed Air last year generated revenue of $7 billion, thanks in part to its Cryovac food packaging and Bubble Wrap cushioning products.
Hanrahan told Insider that about 500 current and potential customers tour UPS Worldport every year and they could also make a stop at the new Packaging Innovation Center.
For some clients, Sealed Air will deliver machinery and provide employee training at the client’s sites, while for other customers, UPS and Sealed Air will take care of packaging and delivery, he said.
Alan Gershenhorn, executive vice president and chief commercial officer for UPS, said the partnership enabled the companies to offer their customers multiple, customized solutions that reduced their packaging and delivery costs while improving customer satisfaction, which ultimately would foster growth at UPS and at Sealed Air.
“When our customers grow,” he said, “we grow.”