Retail, eCommerce and other businesses reliant on packaging are currently facing unpredictable costs due to geopolitical instability, rising oil prices and disruption to supply chains.
The rising packaging costs aren’t just affecting UK businesses, but organisations across the globe. Companies are now proactively reassessing their packaging strategy to improve cost stability, as well as seek sustainable solutions for a more cost-effective, long-term solution.
SR Mailing supplies eco-friendly packaging for businesses and we understand the financial strain many businesses are going through. This blog explains why packaging costs are rising and what solutions you can use to overcome the current instability of packaging prices.
Why Are Packaging Costs Rising?
All types of packaging, including mailing bags, shipping boxes, void fills and labels, have seen an increase in cost. This is due to several factors that relate more broadly to the UK economy as well as the packaging industry individually.
One of the main factors driving packaging costs up is ongoing supply chain disruption, which is making it harder for manufacturers to source materials efficiently, leading to delays, shortages and increased pricing. At the same time, transport and manufacturing costs have climbed significantly because of higher fuel prices, labour shortages and increased operational expenses.
We’re all aware of the geopolitical instability currently happening. This has affected the availability and cost of key raw materials such as paper, plastics and aluminium. Conflicts, trade restrictions and changing international regulations continue to create uncertainty across global supply networks. In addition, inflation and rising energy prices have further placed pressure on manufacturers, with energy-intensive production processes becoming more expensive to maintain.
These combined factors mean rising packaging costs are not simply a short-term fluctuation but an ongoing industry challenge businesses must plan for and adapt to over time.
How Oil Prices Affect Plastic Packaging Costs
Oil prices play a major role in determining the cost of plastic packaging because most plastic materials are derived from petrochemicals produced during the oil refining process. Crude oil prices continue to increase, and recently they have seen a sharp rise in price due to the conflict in the Middle East.
These fluctuations are impacting everything from food containers and mailing bags to industrial packaging materials, and the higher oil prices are also increasing expenses for transportation and distribution. This all creates volatility across plastic packaging supply chains, meaning manufacturers, suppliers and retailers all feel the effects of these rising logistics costs. It’s now become even harder to budget if your business relies heavily on plastic packaging products.
Why Plastic Packaging Is More Vulnerable to Market Volatility
Plastic packaging has seen a drastic price increase over the past few years in the UK. This is mainly due to the dependence on fossil fuel markets and complex global supply chains. Even small fluctuations in energy markets can rapidly increase production costs. Unlike some alternative materials, plastic packaging is therefore highly exposed to changes in global fuel demand, geopolitical tensions and energy shortages.
Over the past few years, the UK has continued to place more pressure on the regulations around plastic packaging.
It’s unsurprising that the Plastic Packaging Tax was introduced by the UK government in 2022, taxing businesses on packaging that contains less than 30% recycled content on a per-tonne basis. This has caused an increase in the cost of virgin polymers, recycling requirements and environmental compliance. Combined with growing environmental scrutiny from consumers and businesses, these factors continue to make plastic packaging more expensive and one of the most volatile in the packaging industry.
Long-Term Stability Benefits Of Paper Packaging
The rise in packaging costs, most notably plastic packaging, has seen businesses seeking alternatives that are not only cheaper but also support sustainability.
Paper packaging has seen a rise in demand because it’s often less directly tied to oil price fluctuations, helping reduce exposure to sudden oil and energy price increases. Fortunately, paper packaging also has a strong recycling infrastructure across many countries, helping to support the reliability of paper supply chains, with recycled fibres playing a major role in ongoing production.
The rise in demand continues to grow across eCommerce and retail sectors, which has also seen encouragement for greater innovation, availability and scalability within the market. For many businesses, this creates opportunities for more predictable long-term packaging strategies with improved supply chain resilience and reduced exposure to volatility.
Sustainability and EPR Advantages of Paper Packaging
UK businesses are now facing more pressure than ever before to find sustainable solutions for their packaging, with both consumers and regulators placing greater expectations on businesses to reduce environmental impact. Paper packaging is widely recyclable and is often perceived as a more environmentally responsible alternative to plastic packaging, especially when sourced from responsibly managed materials.
If your business uses, handles, imports or generates packaging, you’ll likely be aware of the effects of Extended Producer Responsibility (EPR) legislation. This is designed to make businesses more accountable for the environmental impact of their packaging materials.
In addition to the Plastic Packaging Tax, EPR legislation may seem like another hurdle to overcome, but it can actually provide advantages. Businesses are responsible for the total net cost of managing packaging waste, and materials like plastic hit businesses with more fees for disposal. Taking advantage of this, using easier-to-recycle packaging materials, like paper, will reduce compliance costs compared to less sustainable materials. By reducing reliance on virgin plastic materials, businesses can also improve their ability to meet future environmental targets and regulatory requirements.
Why More Ecommerce Businesses Are Switching to Paper Packaging
Ecommerce businesses generally use a variety of packaging materials for products and goods, including both plastic and paper. However, more eCommerce businesses in the UK are opting for all paper packaging or other alternatives to reduce plastic usage and waste.
Thankfully, the improved availability of paper-based mailing products has also made the transition more practical for eCommerce retailers of all sizes. From paper mailing bags and padded envelopes to recyclable void fill and corrugated packaging, the range of options available today continues to expand. Advances in durability and protective performance have helped paper packaging become a realistic alternative for many shipping applications previously dominated by plastic materials.
At the same time, eCommerce businesses are seeking packaging that balances cost, sustainability and practicality. Paper packaging can support brand reputation, assist with environmental compliance and provide a more consistent long-term packaging strategy in a market increasingly affected by plastic-related volatility and regulation.
Choosing the Right Paper Packaging for Your Business
So what paper packaging will best support your business and products?
Kraft paper mailing bags come in a range of sizes and are cheaper than shipping smaller items in cardboard boxes. Perfect for many different eCommerce products, and are recyclable and biodegradable, perfect for enhancing brand image, meeting the expectations of consumers and adhering to eco-friendly regulations.
Traditional void fills like bubble wrap and plastic air cushioning now cost far more than paper alternatives. Options including brown kraft paper roll, honeycomb paper sleeves for bottled products and fanfold kraft paper are highly popular for adding protection as well as providing improved presentation, all while being highly sustainable.
Cardboard boxes have remained a champion of sustainable packaging, and can come in a range of styles, strengths and sizes.
It’s important to find the right paper and sustainable packaging alternatives that suit your product type, fulfilment needs and shipping requirements. At SR Mailing, we’re sure to have the eco-friendly packaging to suit your needs.
If you are looking to manoeuvre smartly through the current economic climate and geopolitical tensions that has seen plastic packaging become costly and hard to source, our range of packaging solutions and expert advice will see you save money and help your business become more sustainable. Get in touch with us to see how we can help.
