Market conditions are driving up the cost of many raw materials, currently buyers are bombarded with price increases across multiple SKUs. Unfortunately, it’s impacting the price of packaging too.
There is a “perfect storm” of market conditions driving these increases:
Online retail has exploded with 5 years growth over 2020, in corrugate alone that’s equivalent to the total output of 2 paper mills. As a society living in lockdown, we have moved our passion for shopping online, comforting ourselves with foodie and alcoholic treats or prepped recipe boxes to inject a little interest into our lives. With restaurants and bars closed, takeaways have surged too – demanding packaging to get them safely to our front door.
The confederation of paper industries (CPI) have published a statement on the current position of the corrugated cardboard industry, you can view that by clicking here. We’ve also created a presentation on the impacts, which you can download by clicking this link.
Corrugate demand isn’t the only piece of this puzzle though, deliveries to our homes are packed with in box protection like bubble or airbags before being sealed with tape. Some are sent out in polythene mail bags and palletised stock for supply chain distribution requires stretch wrap to keep the load stable. These are all polymer-based products – the same material that is being used in vast quantities to make the PPE so badly needed in this pandemic.
China’s economic recovery is ahead of the recovery in Europe, with Industrial production up by 6.9% YOY in Oct 2020. China may be a long way away in miles but, they are impacting the world-wide supply of material.
Many companies have stockpiled to soften the impact of new legislation on January 1st. This increased the demand for raw material over a period which already encounters high seasonal demand.
Brexit also brought a change in legislation around shipments between the UK and EU containing timber packaging. The timber must now be ISPM standard, this means heat treated. This, in particular, is driving demand for ISPM standard pallets.
Shortages in the supply of softwood material going into mills is driven by bad weather, infestation or licencing issues depending on forest location. We’re all going home project crazy with DIY and the construction industry is booming. There isn’t enough capacity in kiln processing to heat treat all of the timber required to meet our needs.
We’ve created a presentation on the timber shortages, which you can download by clicking this link.
Brexit, combined with the pandemic, has created a shortage in shipping containers, driving up freight costs considerably. Just think of all those PPE containers sitting in the UK waiting to be used by the NHS, then multiply that by every country in the world – across a plethora of product lines. It is a lot of containers out of action…. You can read more about the shipping container shortage in articles on the BBC or in The Guardian.
So, that is a very doom and gloom overview of the market conditions BUT don’t despair, Macfarlane Packaging can help!
The everyday work that we do at Macfarlane Packaging is all about helping to you to use less packaging and remove hidden costs throughout your operation.
From re-engineering packaging to use less material, improving palletisation to help you fit more pallets on a vehicle through to speeding up the time it takes to pack – we can help you to achieve more, using less. We are here to help you uncover those hidden costs and eliminate them!
If you’re interested in finding out more, we’ve selected some blogs which talk about these cost savings:
- How a rethink in packaging can change your business
- Managing the Impacts of Brexit and Covid-19 restrictions to deliver operational cost savings
- Four ways packaging can save you money
If you’d like to discuss your packing operation further, why not contact Macfarlane Packaging today to find out how we can help you find and eliminate hidden costs.