US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Closed Loop Manufacturing vs. “Downcycling”…How Should We Best Use Recycled Materials?

Closed loop manufacturing is often prioritized and seen as the gold standard in sustainability. This process bring waste back into where it came from so that waste products return to make the product again and ultimately nothing (or almost nothing) is really wasted. However, there are limits to recyclability without losing performance – strength, flexibility, etc.

Perhaps recycled content has more environmental impact if used in a new way. For instance, recycled plastic bottles, bags, and film can also be made into things like pipe, decking, fencing, furniture, and fleece; and recycled glass containers can be used in the cement manufacturing process and to make countertops. This is often called “downcycling” as the materials are used to make something else rather than to make more of what it was. The process had gotten a bit of a bad rap as closing the loop held our fascination…but is that correct?

Is there greater impact on protecting limited resources and reducing greenhouse gas emissions if recycled content (plastic and otherwise) is used to “green up” a long-lived product like construction materials instead of in something that has a limited lifespan and can be made more sustainable in other ways (e.g., packaging)?

This is the argument in policy circles as they consider recycled content mandates or extended producer responsibility (EPR) programs. If there is a finite amount of PCR (post-consumer recycled content) – and there is – what is the best use of it?

The goal of both is ultimately to incentivize bringing more waste into recycling streams so that more materials are available for reuse and kept out of landfills. But sustainability is multilayers…reduce what you can…reuse what can’t be reduced…recycle what can’t be reduced or reused.

In the end, this might be why there is an increasing trend toward EPR. These programs allow for more flexibility in making sure the recycled content use is optimized and companies are still incentivized to reduce material use overall as well.

Freedonia analysts continue to examine ways various industries are maximizing their resources and minimizing their waste, while keeping in mind current limitations on available recycled content and trends in municipal and private waste management along with consumer participation.  

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Packaging, Construction, and Consumer Goods catalogs, with analysis covering Recycled Plastics in Packaging, Decking, Plastic Pipe, Fencing, Countertops, Global Cement, and more. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Happy New Year!... Is Your Sustainable Packaging Target Due This Year?

More companies have been announcing and pursuing sustainability goals and targets – many of which are coming due in 2022, if they didn’t already in 2021. Packaging is a big part of many of these initiatives, whether increased recyclability, compostability, lightweighting, right-sizing, plastic-reduction, or increased recycled content.

As a result, demand for more paper and post-consumer recycled content of all types has led to high prices… and some creative measures to get the materials suppliers need.

ND Paper in Old Town, Maine, noted that increased online shopping and plastic packaging converting (from bags to pouches and others) to paper-based options, was rapidly driving up prices for the old corrugated cardboard (OCC) they used to make recycled paper pulp. The company began asking local residents to drop off their e-commerce shipping boxes, pizza boxes, cereal boxes, and more at their mill directly.

Novolex, which makes plastic shopping bags, among other products, operates its own polyethylene film recycling facilities. For several years, the company has operated in-store drop-off collections for these films, as single-stream recycling collectors reject films for clogging sorting machinery. In this way, the company works to gain access to the materials they need to make their own plastic packaging more sustainable. More recently, in 2021, the company adopted and promoted recycling labeling  prompting consumers to return the film packaging to stores for recycling, as a relatively small number of consumers are in that habit.

Access to adequate paper and post-consumer recycled materials supplies remains a concern of many packaging companies and suppliers of various consumer products. Extended producer responsibility (EPR) proposals are still a possibility to improve recycling and collection when strapped municipal waste management departments have limited or eliminated recycling services. While in place in the EU, they have yet to advance on a national level in the US. Still, in 2021 Maine and Oregon enacted EPR initiatives for plastic packaging, and more states are considering similar legislation in 2022.

With all the renewed consumer and investor focus on accountability for sustainability targets and goals, Freedonia analysts continue to watch trends in waste management and packaging input demand/pricing.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Packaging and Plastics & Other Polymers catalogs. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Packaging      Plastics & Other Polymers    

Inflation… Shrinkflation… Skimpflation?

The value of goods and services aren’t simply reflected in the price per unit, packaged as sold. We’re all witnessing this trend.

However, price per package can be deceptive, if the size of the package changes. Shrinkflation is a phrase that is being used more to describe situations where the price of the product stays the same, but the size of the package gets smaller. In such cases, we are paying the same for a single box of cereal, for instance, but there is less cereal in that box. So on a price per ounce basis, we are paying more.

However, what if what we’re getting for the price is a lower quality or somehow less feature-rich? This trend, which can be less obvious, is being discussed as “skimpflation.” For instance, many hotels have reduced housekeeping services from every day to just in between guests and as requested, and many others have eliminated shuttle services or what was once a free breakfast. While it is most often seen in the service sector, other examples of skimpflation could be electronics with fewer ports, packaged food or beverage products switching from cleaner labels to the use of more preservatives, or clothing made with thinner or otherwise lower quality fabrics.

Some of the reduction in quality in the service industry is due to insufficient staffing as businesses still struggle to find enough staff to provide the level of service they had provided in the pre-pandemic era. In other cases it’s an attempt to keep costs low. For instance, some businesses discover that the service that is cut or the feature that is reduced isn’t missed all that much by their customers so they keep it in place as a cost cutting measure.

However, it can be hard for government statistics to account for the changes in quality that lead to consumers getting less for their money. While the US Federal Reserve and the US Treasury Department still see this inflationary period as transitory at this time, it is harder to determine if quality degradation or package size reductions will be similarly short term. Package size reductions tend to be stickier as it is often more subtle than changes on the price tag itself. Changes in quality, if it lasts long enough, might be something that consumers get used to as a new normal. That is, until the competitive environment forces change once again.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Industry Studies      Packaging    

Packaging: One Way to Mitigate High Shipping Costs

Right-sizing and lightweighting have long been mantras of the packaging industry. However, with the sky high shipping costs and some companies’ needing to switch to costly air freight to get goods on time, it becomes even more crucial.

Currently, we’re hearing that shipping container costs have risen from about $2,000 per containers a year ago to $20,000 or more per container now. This makes right-sizing your packaging of the utmost importance so that shippers can maximize the amount of product loaded into these historically high-priced containers. Then, proper organizing of a container full of right-sized packages will look like a good game of Tetris so that the boxes are packaged in tightly, minimizing the space between each box. Shippers looking to reduce costs – and that seems like it would be just about everyone’s goal in this environment – will be looking to ensure that they aren’t shipping a lot of air!

However, shippers who have had to switch to air freight in order to get the goods they need in a more timely manner are looking even more closely at lightweighting. Air freight is traditionally more expensive than ocean freight, but is priced by weight of the shipment, not volume. Therefore, checking the gauge of the boxes used and ensuring that it is the right selection for the product being shipped is one step to economize.

Obviously, these steps must be taking with the safety of the product being shipped in mind. With the high costs of shipping and the sometimes long wait times to get replacement product, it is more important than ever to package products to minimize product damage or waste.

Freedonia analysts continue to watch these packaging evolutions, particularly as using less packaging and reducing waste have additional sustainability impacts as well.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area with titles such as Global Corrugated Boxes, Global Pallets, Protective Packaging, Global Packaging & Shipping Tapes, and Global E-Commerce Packaging, and Freedonia Focus reports on Freight Services: United States and Freight by Waterway: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Industry Studies      Packaging    

Companies Adjusting as Consumer Behavior Begins to Return to Pre-Pandemic Norms

While the coronavirus – particularly the delta variant – remains a threat to the US economy, many consumers are guardedly optimistic about the future. Indeed, for those who have been fully vaccinated, there is much more freedom of activity, and the prospect of dining out, shopping, and doing other activities without wearing a mask has encouraged people to return to the modes of behavior they exhibited before the pandemic. Indeed, these changes are taking hold in the economy in surprising ways.

One change is that as people re-embrace in-store shopping, they are relying less on online purchasing. Thus, UPS reported that in the second quarter of 2021, it shipped fewer packages than the year before. While package shipping volumes are expected to remain high going forward, it is anticipated that as consumers continue to return to stores, shipments of packages will continue to recede. This, in turn, will affect demand for such packaging materials as:

  • corrugated boxes and sleeves
  • plastic films and bubble wrap
  • tapes and other materials used to secure packages

Similarly, as concerns about the virus lessen, demand for cleaning products will also be affected. Indeed, the manufacturer of Lysol reported a decline in quarterly sales as consumers were less likely to religiously disinfect surfaces – a practice that became commonplace in the early stages of the COVD-19 pandemic when transmission vectors were less certain. Much as with UPS, while demand for these products is expected to remain high, sales are expected to recede from their elevated levels as consumers become less concerned about surface disinfection practices.

One thing that is NOT expected to recede going forward: the prices consumers pay for these and other products. Manufacturers of a wide range of items – food and drink, consumer products – expect prices to continue to rise throughout the rest of the year. While rising demand is playing a part in these rising prices, many of these price hikes are due to such factors as:

  • rising costs of raw materials
  • higher transportation and shipping costs
  • higher prices and shortages of packaging materials

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, as well as analysis from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Packaging