Temperature-controlled return logistics and the circular economy: challenges and solutions

Published: 5-Jul-2023

As circularity takes centre stage, efficient use of products and materials will become a necessity. This is where return logistics enters the scene

The reverse logistics industry, which is set to be worth around USD $3.2 billion globally by 2032, is critical to the future of circularity and protecting what is left of Earth’s limited resources. A circular economy calls for the reuse and regeneration of materials and products which effectively creates a “closed loop” economy (as opposed to our current linear economy) from production to the end-user. 

In other words, using and reusing materials to reduce excess waste and carbon emissions. The current single-use packaging system honours the “take, make, waste” model which increases landfill waste and greenhouse gas emissions. 

As circularity takes centre stage, efficient use of products and materials will become a necessity. This is where return logistics enters the scene. 

While not a new concept, its execution with relation to temperature-controlled packaging poses some challenges. Although 100% circularity in the supply chain is not feasible, there are ways in which we can maximise the value of temperature-controlled packaging along its life cycle, to ensure sustainability for the long-term.

A successful return logistics model requires the participation of all parties along the pharmaceutical supply chain from suppliers to customers. It would also require a robust and connected network of manufacturers, logistics players and distributors to work together to facilitate what can be a complex and tedious process. Circularity and sustainability are a long-term process which requires proper infrastructure and a change in mindset in the industry about what is truly sustainable.

Temperature-controlled return logistics and the circular economy: challenges and solutions

Challenges of a return logistics model

Lack of visibility and traceability along supply chain 

Visibility and traceability along pharmaceutical supply chains is necessary not only to track the temperature of payloads, but also to facilitate return logistics. In order for a circular solution to work well, visibility along all sections of the supply chain is necessary. This means data, data and more data. Transparent and real-time data along the supply chain is crucial to ensure that resources are not wasted, and that efficiency of logistics is prioritised. An integrated communication network and real-time data transmission will allow for parcels to be tracked with ease across and along the supply chain, especially when parcels are travelling across countries and continents.

Cooperation from other parties along the supply chain 

Participation and commitment from everyone along the supply chain is key when it comes to return logistics. While packaging manufacturers and suppliers have the ultimate responsibility to ensure the containers are cleaned and quality is maintained, customers also play an integral role in return logistics. At the moment, the single-use system is more attractive to customers because it is seemingly more convenient and cost-friendly, even though this is not necessarily the case. Given that it would be a voluntary effort, it may be a challenge to convince customers (and everyone else) to play their part unless it brings their business some benefit or immediate cost-saving. 

Achieving scale of reuse operations

Ensuring that return logistics achieves the necessary scale to remain sustainable and efficient will be a long-term challenge. The single-use system has worked thus far because it is perceived as being more convenient, therefore the reuse model must match the latter’s economic viability in order to be successful. Despite this perception, there are many benefits to using multi-use packaging over single-use, particularly if used on regular basis. Facilitating efficient collection and refurbishment efforts will be key factors in ensuring the reuse model remains both cost-friendly and environmentally-friendly. 

Bearing the additional cost – who does it?

Successful return logistics implies the participation of everyone along the supply chain, including (and especially) the customer. In a single-use system, the final fate of the container is not factored into costs because it usually ends up in a landfill. A reusable model would require the end-user (customer) to take the action of returning the container to the supplier (particularly if it is an inter-continental transfer). While it seems simple in theory, return logistics will incur additional costs, particularly at the beginning. The issue then becomes – who bears the additional cost? 

Suggested solutions

Improved data capturing and monitoring 

Capturing and monitoring real-time accurate data across and along the supply chain will not only reduce temperature excursions but will better facilitate the reverse logistics model. Active data tracking is key to tracking parcels as they move along the supply chain. When data networks are integrated and data can be accurately captured and monitored, locating, retrieving, and refurbishing a parcel becomes much easier. Data is particularly useful where there is an intercontinental network of manufacturers and logistics providers and parcels need to be returned from across the world. 

Rental packaging options 

Manufacturers of cold chain packaging can offer rental packaging options where the ownership of the container remains with the manufacturer. Consumers rent the container and then it is returned to the provider. Intelsius offers such a service with ORCA Rental, a fully customisable, qualified temperature-controlled packaging solution on a rental basis. Renting and reusing parcels in this manner not only saves costs and materials but is a good example of using a product to the end of its life cycle.

Collapsible packaging

Creating packaging that folds into a smaller version or “collapses” like our recently-launched ORCA Pallet will save space and make it easier to transport, thereby increasing efficiency of the logistics and/or returns process. 

Creating a network of return logistics, building it to scale

Possibly the greatest challenge in setting up a successful return logistics model for temperature-controlled packaging will be creating a network of partners (manufacturers, distributors, logistics players) who are well connected. It is challenging because it requires very strong infrastructure and involves many different parties along the supply chain.  

Educating stakeholders 

As mentioned, a huge part of the success of a return logistics infrastructure is owed to cooperation between supply chain parties. In order to cooperate, all stakeholders should be well-informed on the benefits of employing a reverse logistics model and should have a deeper understanding of how it is the most cost-efficient and environmentally friendly way forward. 

Creating a successful return logistics infrastructure is a long-term goal that involves all supply chain parties working together to achieve a truly sustainable model. All stakeholders must come to an unspoken consensus to make the return logistics model viable. Besides being properly informed on the true impact of a reusable system, stakeholders should also take measures to protect and preserve the packaging during the course of its life cycle to ensure maximum usage and minimum waste.

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