Returnable/reusable containers in the automotive industry and the related capital budgeting investment decision

Returnable container distribution systems offer significant potential cost savings over traditional single use packaging systems, but they require a large initial investment. Returnable/reusable systems can provide a reduction in material costs, utilization of full cube in trailers and reduction in disposal costs.;The goal of this research is to explore returnable container distribution systems and to determine how the related packaging investment decisions are made. A case study analysis of ten leading automotive assembly companies was used in order to understand factors that influence such decisions.;Three distinct types of automotive returnable systems were revealed depending on the method used for cost justification, ownership of the containers and percentage of returnable container use. All ten companies studied report financial gains from returnable container systems and plan to increase their usage. Two of the companies reported a decrease in overall transportation costs even with the addition of return freight expense.