2018 continues to be a turbulent time for the UK Packaging Industry. Early 2017 saw the effects of Brexit still being felt on imported packaging, notably on primary retail-based packaging for High Street and luxury brand retailers. Raw materials were affected too as the pound plummeted against other currencies.
Increases in paper prices also impacted the sector, particularly within the corrugated industry where availability became an issue and remained so as we entered the second quarter of 2018. Increases here have totalled in the region of 20%, with the most recent being implemented in March of this year. Polymer-based materials have also been affected, but it has to be said by a much lesser degree, although the market continues to remain volatile and unpredictable.
Timber too is suffering a similar fate to corrugate, where prices have risen sharply and availability of material has been heavily reduced due to the amount of raw material being shipped into China to support a surge in residential development needed to house a burgeoning population. Availability of timber is now a bigger issue than price, with many pallet and timber-based packaging suppliers not wanting to take on new work in order to support existing clients.
Overall the situation has not been helped by lessening supply options. During the last few years, industry giants in the corrugated industry such as DS Smith and Smurfit Kappa have pursued an acquisition programme that has seen a reduction in the number of independent regional type sheet feeders and sheet plants.
In the Merchant trade, both Antalis Packaging and Macfarlane Packaging have been acquiring companies, with Ambassador Packaging, 1st Class Packaging, Donnington Packaging and Parkside Packaging all being acquired by Antalis.
Macfarlane have been busy snapping up Allpoint Packaging, One Packaging, Nelsons for Cartons and most recently Greenwood Stock Boxes. Timber too has been equally affected with Scott Timber purchasing national suppliers such as Whirlowdale and HLC Wood Products. These trends seem likely to continue.
Specifications, too, have come under pressure, with many manufacturers stretching industry tolerances to the lower end of their limits. In many cases, “cheaper” prices simply mean increased usages.
Concern for the environment is adding to the pressure; the much publicised ‘war on plastic’ continues unabated and companies and suppliers are now coming under more and more pressure to prove their environmental credentials.
With increasing prices, reduced availability, varying specifications, a decreasing number of supply options and environmental pressures, it’s a bit of a tangled web, but one from which ERA can help you to extract yourself. We are totally independent of any supplier and work within the packaging industry every day of the week in all sectors, including high-end retail, manufacturing and distribution.
ERA are well-positioned to quickly identify:
- Where savings might be achieved
- Potential reductions in material usage
- Supplier choices that might be more appropriate to the client
- A potential reduction in internal stockholdings
- Alternate specifications and methodologies that may provide a more appropriate solution
- Materials which might provide a more environmentally friendly option
It should go without saying that quality and availability of product should not be compromised in pursuit of savings, but it is getting harder to navigate your way around the packaging industry and it is getting increasingly difficult for buyers to know whether or not they are getting a fair price, without some independent third-party advice.
Get in touch with us today to discuss your packaging costs with our expert specialists.
Article by: Richard Anson