At last week’s Livestream Hour Lucid Motors’ John Ferry was joined by Rodney Salmon, of Salmon RTP, to discuss the importance of putting sustainable packaging first when setting up an inbound supply chain
Battery EVs are currently heralded as the answer to an emissions-free future of driving, but the revolution will only be as green as the supply chain supporting it. An important part of that supply chain is the packaging used to deliver the inbound parts.
Opting for packaging that is lighter weight and returnable cuts waste in the supply chain, including through significant savings in the transport used to move the parts. Apart from the lithium-ion battery, the parts used in an EV are significantly lighter than those used to drive a car with a traditional internal combustion engine (ICE). With plastic returnable packaging, the savings increase with every 100km travelled, according to Rodney Salmon, senior partner at Salmon RTP – Returnable Packaging Consultancy.
“Just imagine if you could take 25% weight out of the trailer and how much savings there would be,” he said (see Quick Poll results on packaging miles travelled). “One of the things that always surprises me is that the larger lead logistics providers haven’t jumped on the bandwagon of offering lighter-weight packaging. [The savings] are not just on fuel and emissions, they’re on tyres that wear out because of heavier loads.”
The US automotive supply chain changed to extended-length folding plastic pallet boxes 25 years ago and they are now used predominantly instead of the older steel stillages. That said, there is still plenty of evidence that costly and unnecessary packaging is being used as consequence of time and purchasing constraints.
Reuse, recycle, return
US electric vehicle start-up, Lucid Motors, will be releasing its first model on the market next year in the shape of the Lucid Air. To match the environmental credentials of its emissions-free car the company is looking to put in place a sustainable supply chain from the get-go.
“We are closing in on the start of production and trying to get as many ideas into play as possible for reusing material or finding some kind of second life [for packaging] that isn’t landfill,” said John Ferry, Lucid’s packaging design engineer.
He explained that Lucid was aiming to resell the wooden pallets it used and recycle any expendable corrugated board. It is also looking at the use of foam densifying machines, which take the expanded foams used in parts packaging and compress them into compact cubes.
“We are also going through some of our high-volume running plastic thermoform trays to see whether we can get a second life out of those via regrind or some other means,” said Ferry.
Lucid is also looking for efficiency savings through better utilisation of space on international flows through a standard pallet size of 1140x980mm (slightly trimmer than the 1200x1000mm standard typical in Europe).
“In the high-volume environment of rapid loading of sea containers, slightly trimming down those dimensions is beneficial to making sure you get good [cube] utilisation every time and making sure you have a little extra room to fit.”
Lucid is specifying the packaging design for all of the parts going into the car and controlling the shipping labels. With regard to the labelling, Ferry said the company was aiming for a one-shot goods receipt for the entire pallet on arrival at the unloading dock.
“We have been working hard on a standard which will achieve that and [will use] a barcode technology that is in pretty wide use,” said Ferry. “That is our goal, to come up with a label that [facilitates] really high volumes of material unique to automotive and would enable one-shot goods receipt at the pallet level.”
While a huge effort, Ferry describes Lucid’s control of labelling and packaging design a good synergy of compliance activities.
Compliance with standards needs improving across the industry, according to Ferry, who was also previously senior packaging engineer at Tesla. He said that without the effort to enforce standards through strict guidelines they can be compromised.
As seen in its search for better container utilisation, that is especially important when it comes to pallet sizes, given Lucid’s international supply chain, said Ferry. In the US, the company complies with guidelines on pallet size set up by the Automotive Industry Action Group (AIAG), which maintains the framework for the improvement of quality in the North American automotive industry. However, things get less structured further afield.
“Between Europe and Asia-Pacific you will find a lot of different sizes,” said Ferry. “We are using one that is popular with a couple of other automakers. Ford and Tesla on their international footprints have something similar to what we are using, but it would be great if the industry could coalesce on international shipping standards.”
Battery packaging is one area that is in urgent need of standardisation, according to Salmon, especially when it comes to the packaging for lithium-ion batteries that are being returned damaged or at the end of their useful life. While standards are being agreed for the packaging of new inbound batteries, return packaging is covered by dangerous goods certification and that changes from country to country.
“We really need someone to come up with standardisation for packaging across the board,” said Salmon. “You can take a disused battery and as long as it has been tested by the manufacturer into a certain packaging it could be plastic, metal or even expendable. The dangerous goods certification is varied but it needs to be standardised.”
The situation is made more problematic by the fact that lithium-ion batteries come in an abundance of different sizes and weights.
To hear how automotive manufacturers are making their plants and value chains more sustainable through new processes and technology, sign up for the Automotive Manufacturing Solutions livestream on Wednesday November 25.
For the majority of the rest of the parts making up the vehicle, returnable packaging provides better protection from supplier to lineside. Automotive is an ideal industry for a closed-loop packaging strategy, but a successful returnable packaging loop first needs the right infrastructure, management and supplier coordination in place.
Lucid is building its factory in Casa Grande in Arizona, not a traditional hub for automotive manufacturing but one with a business-friendly environment that is already attracting the interest of rival EV makers, something that could bode well for more efficient packaging loops in the future.
“Provided we have the network in place and the right people around to manage the returnables … the cleanest application of capital is to buy your own containers and realise the price reduction from not using cardboard yourself; that is a best-case scenario,” said Ferry.
At the same time, Lucid is looking close at renting opportunities with packaging providers Chep and Goodpack. “We are a start-up, so volumes will start low and in that case the financials might lend themselves to rentals.”
Outsourced container pooling has grown in popularity over the last decade as services have improved. Outsourced pooling frees up capital and removes the hassle and administration of a company having to track, trace and maintain its own pool of containers. Being able to secure the right amount of packaging for your given purpose and renting only what you need without capital expenditure is a strong model for any company, especially a start-up like Lucid.
Salmon pointed to a service that packaging provider Chep already has in place. “You can rent containers from them for one trip only and it is up to Chep what they do with the bins after that and when they send them back,” he explained. “It is not up to the OEM to come up with the returnable system, Chep do that and look after it and they offer the service right now.”
That is of definite interest for Lucid on its international lanes given the huge investment needed up front to secure parts shipments from overseas, according to Ferry.
“The investment grows fast and is harder to sell, that is the main challenge of international returnables,” he said. “If there was a pooling collaboration, I would love to learn more about it and see what the opportunities were for Lucid.”
That is just one area where carmakers stand to benefit from the expertise of their packaging suppliers and Salmon was keen to highlight the wealth of experience and ideas that those suppliers had.
“Any good packaging supplier will have to substantiate what it is trying to market and sustainability is a big part of that – understanding the recyclability, the reuse, the light-weighting of it and looking at the returnable and foldable market out there. Go to your packaging suppliers and ask them to come up with the ideas. That is what they are there to do.”