by Peter Kusnic
May 19, 2020
Despite some temporary disruption due to the COVID-19 pandemic, healthy annual growth is expected for the $6.1 billion US protective packaging market through 2024, bolstered by rapidly rising demand in e-commerce applications and a healthy outlook for the dominant manufacturing segment. Below, we highlight some key trends that will affect growth for protective packaging through the near-term impact of the coronavirus crisis and beyond.
The COVID-19 pandemic is set to have a significant short-term impact on protective packaging demand as a result of a downgraded outlook for US output. Nevertheless, protective packaging will hold up better than many other industries, despite slowing or declining short-term outlooks in some applications.
For example, while e-commerce sales are expected to accelerate and nondurables manufacturing will continue to be supported by the essential nature of many products in this category through the pandemic, durable goods manufacturing will be constrained due to the economic disruption. That’s because durable goods are often big-ticket items, like motor vehicles, which consumers tend to put off buying in times of economic uncertainty.
Longer term impacts are expected to be subtle, though that depends on how fast the economy recovers post pandemic. One likely long-term outcome is that e-commerce will have a larger share of the market than originally expected, as current events accelerate the shift toward online shopping.
The rapidly growing importance of e-commerce is driving development of packaging that can help improve efficiencies of online order fulfillment. In particular, the high cost of shipping items directly to consumers has driven retailer and manufacturer efforts to use primary packaging that can also serve as a shipping container.
While this “e-commerce ready” packaging has had a relatively small effect on protective packaging demand in the past, this is changing as retailers increasingly incentivize or require product packaging that is ready to ship. For instance, in August 2019, Amazon began to charge vendors a fee of $1.99 for every large or heavy package that does not qualify as ready to ship per Amazon’s Frustration-Free certification, which requires item primary packaging to be:
Sustainability is an increasingly key consideration for protective packaging suppliers, particularly as the international movement to ban or restrict single-use plastic and products continues to gain momentum, with corporate giants such as American Airlines, Disney, and Starbucks having announced bans on plastic straws and other such products.
In addition, a number of cities and several states have taken steps to reduce or eliminate further accumulation of plastic waste in landfills, including by levying taxes on businesses that distribute single-use products and bans and enacting restrictions on use of semi- or non-recyclable plastics (e.g., EPS) in manufacture of single-use products.
In January 2019, for example, New York City banned companies from selling foam loose fill products (also known as packing peanuts) in the city, leading many e-commerce companies serving the area that had previously used EPS loose fill when shipping orders to use alternative protective packaging items, such as bubble packaging or paper fill, to avoid fines.
A growing emphasis on packaging sustainability by consumers and governments has fueled development of a range of environmentally friendly alternatives to conventional packaging materials, including recyclable and biodegradable/compostable types, such as agricultural byproducts that can be molded into custom shapes and grain-based loose fill. For example:
While more sustainable materials such as biodegradable foams made from cornstarch or soy are being utilized more often in protective packaging, they will remain niche due to their higher costs and the fact that starch-based material is vulnerable to moisture and has been known to attract pests.
Other sustainability efforts involve supporting recyclability by creating more products made of a single material (e.g., a mailer made exclusively of plastic or paper), as multi-material products such as a paper mailers with inner bubble packaging are often not accepted by curbside recycling programs. For example, in November 2019, Intertape Polymer entered an agreement with HexcelPack to produce and sell a new line of 100% recyclable curbside-friendly packaging solutions made from paper under the brand name Curby.
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About the Author:
Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.
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