How Tax Incentives & Operational Pressures Are Accelerating Automation Adoption

July 1, 2026

Packaging operations are under more pressure than ever.

Manufacturers, distribution centers, and fulfillment operations are navigating rising labor costs, labor shortages, dimensional weight pricing increases, sustainability expectations, and ongoing uncertainty around tariffs and global supply chains. At the same time, many organizations are being asked to improve throughput and reduce cost-to-serve without adding operational complexity.

For companies evaluating packaging automation, recent U.S. tax legislation commonly referred to as the One Big Beautiful Bill (OBBBA) may significantly improve the financial case for investing now.

By restoring and expanding several pro-investment tax provisions, the legislation creates an opportunity for businesses to accelerate automation projects while improving near-term cash flow and long-term operational efficiency.

Why Packaging Automation Has Become a Strategic Priority

Manual packaging processes create hidden operational costs that compound over time. Labor-intensive packing operations can struggle with workforce variability and turnover, while oversized boxes drive higher DIM charges and shipping costs. Excess corrugated and void fill increase material consumption, and manual processes often create bottlenecks that limit throughput. At the same time, many organizations face growing pressure to reduce waste and support sustainability goals.

Automated, right-sized packaging addresses many of these challenges simultaneously by creating custom-sized boxes on demand for each shipment. For high-volume fulfillment operations, this approach can help standardize packaging workflows while reducing unnecessary material and shipping costs at scale.

For many operations, the result is lower corrugated consumption, reduced parcel shipping costs, less void fill, improved throughput, and reduced reliance on manual labor. Together, these gains can create a more efficient and predictable packaging operation.

As fulfillment and manufacturing environments become more complex, packaging automation is increasingly being evaluated as a strategic infrastructure investment rather than a standalone packaging upgrade.

How the One Big Beautiful Bill Supports Automation Investment

The legislation reinforces several tax provisions that directly benefit investments in automation and capital equipment, including:

  • 100% bonus depreciation for qualifying equipment
  • Expanded Section 179 expensing limits
  • Favorable treatment for capital investments in production infrastructure
  • Immediate expensing provisions for qualifying R&D activities

For organizations purchasing automation equipment, these provisions may allow a significant portion — or potentially all — of the investment to be deducted in the year the equipment is placed into service, rather than depreciated over multiple years.

This can materially improve project economics by:

  • Lowering after-tax investment cost
  • Improving near-term cash flow
  • Compressing payback timelines
  • Increasing projected IRR
  • Reducing the financial risk of modernization projects

These financial advantages are important, but they only tell part of the story.

Increasingly, organizations are investing in automation not simply because the economics are more attractive, but because automation helps reduce operational risk in an uncertain business environment.

For many organizations, the conversation has shifted from “Can we afford to automate?” to “Can we afford not to?”

Packaging Automation as a Risk Reduction Strategy

While the tax advantages are meaningful, many companies are investing in automation for a broader reason: operational resilience.

Labor markets continue to fluctuate. Parcel and DIM pricing continue to rise. Supply chain strategies are evolving in response to tariff pressure and regional sourcing shifts. At the same time, operations leaders are being asked to improve service levels while controlling costs.

Automation helps organizations reduce exposure to these variables by creating more standardized, scalable operations.

For example, automated right-sized packaging can help companies:

  • Reduce labor dependency in fulfillment and packaging operations
  • Lower freight exposure through smaller parcel sizes
  • Minimize corrugated and void fill consumption
  • Improve packaging consistency and reduce damage rates
  • Support ESG and sustainability initiatives through waste reduction

Supply chain flexibility also matters. Companies with regional manufacturing and support capabilities are often better positioned to help customers mitigate tariff exposure, reduce lead time pressure, and improve deployment responsiveness across North America and Europe.

A Practical Example

Consider a fulfillment operation shipping thousands of orders per day. During peak season, hiring and retaining enough packaging labor becomes increasingly difficult, while parcel carriers continue to apply dimensional weight pricing to oversized shipments.

By automating the packaging process and producing right-sized boxes on demand, the operation can reduce labor dependency, decrease corrugated consumption, and ship smaller parcels. The result is a packaging operation that is not only more efficient, but also better positioned to adapt to labor fluctuations and rising transportation costs.

When combined with accelerated expensing provisions available through the OBBBA, the project economics can improve substantially in year one through both immediate tax savings and ongoing operational cost reductions.

For many organizations, this creates a stacked ROI effect.[GH1.1] Tax advantages can improve project economics upfront, while operational improvements continue to generate value over time.

Packsize customers commonly report measurable operational improvements after implementing right-sized packaging automation, including average corrugated savings of up to 30%, package size reductions of 40% or more, and void fill reductions averaging 80%. In some applications, automation can also help eliminate up to 20 manual pack stations per machine.

Those savings can translate directly into lower material costs, reduced parcel shipping expenses, and improved operational efficiency.

When operational savings are layered on top of accelerated tax advantages, packaging automation projects may achieve payback timelines that are significantly shorter than many traditional capital investments.

Why Timing Matters

Many tax advantages depend on when equipment is placed into service, not simply when it is ordered.

As a result, companies evaluating packaging automation should consider:

  • Deployment timelines
  • Scalability of the solution
  • Operational readiness
  • Integration complexity
  • Speed to value

Solutions that are modular, flexible, and designed for faster implementation may help organizations better align automation investments with desired fiscal timelines and operational objectives.

Looking Beyond Tax Incentives

Tax policy may help accelerate investment decisions, but the underlying operational pressures driving packaging automation are likely to remain.

Organizations continue to look for ways to improve EBITDA performance, reduce cost-to-serve, increase operational leverage, protect against labor volatility, and reduce freight and packaging costs while continuing to advance sustainability initiatives.

For many manufacturers and fulfillment operations, automated, right-sized packaging is becoming part of a broader strategy to build more efficient, resilient, and scalable supply chains.

Final Thought

Recent U.S. tax legislation has changed the financial landscape for capital investment in automation.

For organizations already facing rising packaging, labor, freight, and operational costs, the combination of accelerated tax advantages and measurable operational savings may create a unique opportunity to modernize packaging operations while building a more efficient and resilient operation for the future.

As always, companies should consult with their tax and financial advisors regarding how these provisions apply to their specific acquisition structure and business situation.

Brady Pettit

Vice-président principal, finances mondiales

Brady Pettit a rejoint Packsize en 2013 en tant que contrôleur nord-américain. Dans ses fonctions actuelles de vice-président senior des finances mondiales, Brady dirige tous les groupes financiers de l'organisation.

Avant de rejoindre Packsize, Brady a occupé le poste d'auditeur des états financiers chez KPMG pendant six ans, dont la dernière année en tant que responsable de l'audit. Il a ensuite travaillé pendant deux ans en tant qu'administrateur de cabinet dans un cabinet médical local. Il est titulaire d'une maîtrise en comptabilité obtenue à l'université Brigham Young.

Habitant dans la région de Salt Lake City, Brady apprécie les moments passés en compagnie de sa femme et de ses cinq enfants. Ce temps en famille est très important pour lui, et il aime particulièrement les activités telles que le ski, la navigation, et assister à des matchs de football, des compétitions de crosse et de pom-pom girls avec ses proches.

Kellen Frey

Directeur de l’exploitation

Kellen Frey a rejoint Packsize en 2016 en tant que vice-président des opérations et a été nommé vice-président senior en 2019. Il a initié la croissance des équipes de R&D américaines et a piloté l'entreprise lors de multiples déménagements d'infrastructures à Louisville, KY, et Salt Lake City, dans l'Utah. De 2022 à début 2024, Kellen s'est concentré sur la création et le développement de marchés clés aux États-Unis et au Mexique. Il a été promu au poste de directeur des opérations en 2024.

Avant Packsize, Kellen a travaillé pendant plus de dix ans dans le secteur des dispositifs médicaux pour Zimmer Orthopedics, où il a occupé de multiples fonctions, notamment dans les domaines de la vente, de l'approvisionnement, des opérations, de la logistique, de la distribution et du service après-vente. En 2015, il a contribué à l'acquisition de Biomet par Zimmer, son concurrent, ce qui a donné naissance à l'une des plus grandes entreprises mondiales d'orthopédie actuelles. Kellen est titulaire d'un diplôme de premier cycle de l'Université de l'Utah et d'une maîtrise en gestion d'entreprise de l'Université du Wyoming. Il est également certifié Lean et Six Sigma.

Kellen et Kari, son épouse, passent le plus clair de leur temps à accompagner leurs quatre enfants dynamiques à des événements sportifs et gymniques dans la vallée de Salt Lake. Kellen aime l'athlétisme et se passionne pour l'entraînement des chevaux et la conduite de voitures de course.