6. Cost calculation

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Before making a decision on which package type to introduce it is wise to analyse costs and benefits.

The packing costs will depend on:

• The type of the crate.
• The size of the crate.
• The design of the crate.
• The quantity of crates purchased.
• Transport and import costs and duties.
• The container assembling costs (carton boxes).
• The need for internal packaging materials (liners, pads, dividers).

Also factors such as acceptance by the customer, pilferage, possibility to repair, local manufacturing and availability should be taken into account when calculating the cost of a crate.

The importance of the characteristics of packaging, as described in Chapter 3, will depend on the situation in which the packages are used. However, it may be difficult to estimate cost benefits from reduced losses, increased goodwill of consumers, increased marketing efficiency, better quality of the produce and reduced handling time.

An example is given below of a cost analysis of four different types of packaging: a wooden collapsible crate, a plastic stack-nest crate, a plastic stack crate and a carton (fibreboard) box.

Instruction sheet 2 clearly outlines the different direct costs which determine the total cost of a certain type of package.

a. Wooden collapsible crate (600 x 400 x 330 mm)

b. Plastic stack-nest crate (600 x 400 x 310 mm) (July 1988, US$ 1.00 - DF1 2.05)

Taking into consideration customs duty, consumption tax, stamp duty and local transport one crate would cost approximately US$ 24.00. With an estimated number of forty journeys the cost per trip is around US$ 0.60 per trip. If we estimate the cost of transport between two islands at US$ 2.50 plus 2/5 of this cost for the return freight (nested) the total transport cost is US$ 3.50 per trip.

Total cost stack-nest crate per return trip US$ 4.10

c. Plastic stack crate (600 x 400 x 310 mm) (September 1988)

During the return trip when crates are empty, one crate can be stored inside two others. This type of crate will be able to withstand an estimated forty trips and this means US$ 10.94/40 - US$ 0.27 per trip. The transport costs (US$ 2.50 and 2/3 * US$ 2.50 for the return freight) are around US$ 4.17.

Total cost plastic stack crate per return trip - US$ 4.44

d. Carton (banana) box (508 x 330 x 184 mm)

Because the volume of the carton box is only 39% of the volume of the plastic and wooden crates, the total cost has to be multiplied by 2.57 to enable a comparison with the other crates.

Total cost for 2.57 carton boxes per single trip - US$ 6.70

From an economical point of view, the above comparison is in favour of the plastic stack and stack-nest and the wooden collapsible crate, but the risk of pilferage of plastic crates is high and therefore the actual running cost for the plastic crates may be much higher. The carton boxes have no return freight and the traders do not have to worry about returning of boxes. Also government policies or consumers demands could force the farmer or trader to use the more expensive carton boxes in order to get the produce sold.

Plastic crates are very suitable as field crates for transporting produce from the field to the packing shed. In that case the farmer can keep control over his crates, or where there is an abundance of plastic crates, a refund system can be established. If the crates are to be used as field crates the economical comparison, without the transport cost, is as follows:

Using these figures only, the plastic stack crate is clearly the cheapest crate and, as was to be expected, it is not advisable to use carton boxes as field crates.

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