- 22 Jan 2021
Packaging Industry Updates
Packaging Industry Updates
As we enter 2021, we are all hoping to leave the words unprecedented, times behind us. The UK packaging industry is learning to adapt through multiple lockdowns and Brexit, as parliament continually make changes. This document highlights the main changes within the industry in the past 12 months and how it has affected our industry.
We have predicted the growth of online sales for many years watching as it continuously grows. Covid-19 has accelerated this development as consumers are online shopping now more than ever due to a lack of in-store shopping availability. As we entered out 3rd lockdown, we saw local and high street stores close and take another hit to their sales, many companies are now having to sell online in hopes to keep their business afloat. This resilience has resulted in the growth of the packaging and postal industry.
A lot of small businesses have turned to selling on Amazon and other online selling platforms. This has led to a larger effect of longer lead times and caused a shortage in the packaging industry. Other factors affecting this are port issues, lack of staff due to Covid-19 and a global imbalance of the supply chain, all of which have been factors resulting in the rising packaging prices.
Throughout the multiple lockdowns, we have had to see some brands such a Peacock and Debenhams go into administration. However, we have seen a lot of new businesses and high street retailers move more towards online selling. The loss of jobs due to the virus has had one positive effect in allowing people to start their own ventures and explore their creative side.
Surveys have found that Gen Z are more concerned about the effects of the pandemic on the economy than Gen X and Boomers. This concern has led them to changing their buying habits, moving to more online sales rather than instore purchases in result they’re not having to alter their purchasing habits, whereas Gen Y and Boomers are altering what they buy rather than find other ways to purchase their products.
As the Brexit negotiation changes on the daily, UK business have been the ones to suffer and have been left in limbo. Packaging industries are finding a huge delay in their supply chain and some are seeing an increase in port costs from $1,500 to $15,000. Eleanor Hadland, a ports analyst at the maritime consultancy Drewry, said "the whole global container supply chain is basically out of balance".
Due to Brexit negotiations, there has been a delay in cardboard production. Most of the UK cardboard supply comes from Germany and Poland, with unknown deals on taxes, companies are finding a delay in the supply chain. Covid-19 has also been a factor in this, with recycling companies having to close due to lockdowns there is a significant drop in recycling cardboard therefore more virgin materials are having to be used in the manufacturing. With rising demands and lack of replenishment, wait times are getting longer. Some businesses are seeing a lead time of over 12 weeks for the supplies.
As a result of all the listed factors the UK packaging has resulted in an unavoidable price increase. This may be an ever-changing factor until we return to a more stable solution. Until then we advise to plan ahead be prepared for changes and don’t be afraid to ask the right questions.