As 20223 begins; there is uncertainty of what the year will bring to the packaging industry. Some are being positive and betting the packaging industry will be in outstanding condition for 2023 while others do not. Pack Protocols wanted to weigh in where the packaging industry may be heading in 2023 by providing foresight.

  • Packaging companies are continuing to offset their increased labor costs since pandemic times

Packaging companies have had to pay more for highly skilled labor. To offset costs, certain companies have decided to pay these high wages to only select employees. Overall, the number of workers were slashed. These strategies are similar to the moves made in the late 2000’s before and during an economic downturn. The exception being the use of high wages for employees.

  • Specific packaging materials remain to be difficult to acquire

Since the publishing of 2022 Packaging Visions, the majority of packaging material supply has increased. Some materials have returned to pre-pandemic capacities. There is an existing shortage of aluminum foil due to the aluminum being produced and converted in South East Asia. Other reasons for aluminum reductions are struggles with production as well as shipping. Other specialty packaging materials such as Tyvek have had challenges to meet increased requests. The manufacture of the material could not support opening additional lines. Processing complexity of Tyvek and the financial impacts to build additional facilities compounded already existing supply issues.

  • Packaging firms are consolidating

2022 saw a huge increase in mergers and acquisitions in the packaging industry. In the past decade or so, the number of corrugated and paper companies have shrunk due to mega mergers. These moves swallowed up mid level companies. Other enormous, non-paper based packaging companies are attempting to get into other channels and global locations of packaging (e.g. Sonoco acquiring Ball Metalpack and Skjern Paper) to acquire instant market share.

As colossal corporations vertically integrate and insert new services, it may or may not be the best. Packaging purchasers will have their hands tied to these companies. This could lead to smaller outfits either taking on more customers or being swallowed up. Similar to the tech industry; new packaging technology companies are beginning to consolidate. Either their investors want to make their profit and exit or the once expanding market is starting to level off.

  • Shipping packaging and products via logistic carriers are increasing

The logistic carrier industry has been inundated during the pandemic years with more freight than ever. This has caused numerous challenges including limited vehicles, workers, on-time shipments. With the increased model of DTC/D2C it has created complexities for the carriers. Due to the change of models certain carriers will be implementing massive fees. Examples are:

  1. per item fees for items that are extremely long (12 ft or greater)
  2. shipping to areas where there is small volumes will incur a fee
  3. additional fuel charge fees and typical freight increases will be in effect

All of these bulleted items above indicate 2023 will be a busy year to address these packaging issues. Tackling these issues all at once can be challenging. Pack Protocols LLC can help alleviate these challenges. Contact us at 657-204-6093 or [email protected]!