Packaging Industry Update
There are some big headlines as we move towards Quarter 4. We’ve tried to keep the text to a minimum and provide clear action points. Here are those action points…
Make sure your corrugated supply is secure up until end of December and forward order where possible to avoid increase.
See new corrugated index in this report.
Prepare for further increases across all packaging materials of varying scale. Plan for around 10%. Use reports like this to demonstrate to your clients how much packaging materials have gone up.
Use this report to demonstrate to your clients and put plans in place now. Indexes and explainers below.
Ask us for a report of plastic items and alternatives – we can provide samples and prices for feasibility, including a full environmental report.
The plastic tax is coming closer – full details and advise on this tax available here.
Progress any machinery plans quickly! The super deduction is a great opportunity.
There is a Super Deduction you may not be aware of.
Corrugated Fred Economic Data
Affects corrugated such as cartons, layer pads and other paper-based products.
It won’t come as a surprise that the corrugated index is now rising sharply. Peak is approaching and those that buy corrugated will remember last year when large ecommerce companies hoovered up all the paper.
An increase of 8% went in September and the spike is continuing at the same rate.
Expect increases of up to 10% in Oct / Nov and make absolutely sure that your corrugated supply is secured right up to Christmas.
Packaging Film Fred Economic Data
Affects plastics such as Film, Strap, Bags and Covers
Packaging Film has followed the corrugated trend, perhaps even sharper. This, after a short break in the spike. Again, demand may be a feature here and it seems there will be little respite up until December.
Expect increases of over 10% in October as plastic manufacturers react. Demand may not be as much of a challenge as corrugated, but it will be worth checking that your supply of any bespoke plastic is well organised.
World Container Index Drewry WCI
Affects All Imported Products, mostly Tape, Strap, Machine Film and Hand Wrap but other items apply.
The container index follows a predictable trend, but it has slowed down. Plus Packaging have kept up with the tariff but not increased it yet to follow (it was established in March).
This is not expected to change anything yet as most increases in carriage are being absorbed into product price.
By far and away the clearest description of the Plastic Tax is here – on the government website – Plastic Tax Information
In short, the drive is to get us all to use more recycled plastic. Many packaging items already contain more than 30% recycled material – but some don’t. So what will actually happen? Items like Film and Tape will go up in price – quite sharply, by approximately 10%. It seems likely that plastic as a rule will go up as demand for recycled plastic will go up and supply chains may not be ready for that.
Find out which packaging items contain 30% and which don’t. Request quotations and samples for alternatives of plastic reduction or replacement products – there are many available and we are very happy to help.
On a brighter not, there is a great opportunity for packaging machinery! This applies to all kinds of machinery from Pallet Wrappers through to Strapping Machines. Here’s the detail:
“The super-deduction offers 130 per cent first-year relief on qualifying main rate plant and machinery investments from April 1 2021 until March 31 2023 for companies. For most business equipment, there will be a super-deduction of 130 per cent of the expenditure incurred.”
Here’s the formal link:
If you are considering new machinery or a packing bench upgrade – get pricing in and progress! This is an ideal opportunity if such plans are in place.
Here’s the headlines and action points. We can make it as easy as possible for each one:
- Make sure your corrugated supply is secure up until end of December and forward order where possible to avoid increase.
- Prepare for further increases across all packaging materials of varying scale. Plan for around 10%. Use reports like this to demonstrate to your clients how much packaging materials have gone up.
- Ask us for a report of plastic items and alternatives – we can provide samples and prices for feasibility, including a full environmental report.
- Progress any machinery plans quickly! The super deduction is a great opportunity.
As always, we will only increase items to the degree that material has been affected, avoiding broad brush price hikes. We all know material increase cannot be ignored but are committed to making this as easy as possible for you and ensuring all options are available to your packing team.