The Supply Chain has affected almost everyone and everything. This is from our basic food and groceries, electronics, natural gas, cars, and more. The Packaging industry is no different in what we have experienced in terms of Supply Chain issues.
The Supply Chain has affected almost everyone and everything. This includes basic food and groceries, electronics, natural gas, cars, and more. The Packaging Industry is no different in what we have experienced in terms of Supply Chain issues. What is causing these Supply Chain issues? Demand has outstripped supply for the most part. Other influential factors are inflation increasing the price of raw materials, the impact of weather and storms, transportation challenges, and rising costs.
Here is a breakdown of what we saw specifically with Packaging Raw Materials and the Supply Chain most recently provided by BerlinPackaging.
In North America, we have seen extremely limited glass supplies for packaging and other industries. There are many reasons for this.
First, you have the rising costs of raw materials to make glass, then freight shipping costs have gone through the roof, and high energy prices have not helped. You also need to take into account the labor shortage in the U.S.
Other foreign countries have a great capacity to produce and make glass packaging. However, Ocean Freight rates are up an incredible amount. When you take into account a 25% tariff on Chinese glass imports, the options become more limited for glass packaging.
Glass prices are not the only things that shot up last year; Aluminum prices did as well. Currently, we saw Aluminum at a 13-year high in 2021. Why the increase? One reason is that many brand owners are switching to aluminum packaging for its recyclability and reusability or refill capabilities. However, China, the world’s largest aluminum producer, has cut production as part of its new policies to reduce greenhouse gas emissions. Less production but more demand means higher prices.
Aluminum can manufacturers in America are encouraging the passing of container deposit laws to boost the recycling rate of aluminum containers from 45% to 70% by 2030. As it is, nearly 75% of aluminum beverage containers are made from post-consumer and post-industrial recycled content.
Cold-rolled metal prices have also gone up. Tariffs and high ocean freight rates have limited the imports of these materials. Additionally, China is also cutting steel production to reduce its carbon emissions. This limited supply has caused some manufacturers of steel packaging to increase prices, for basic items like food cans, by as much as 50% for some packaging. Tin plate costs are expected to keep rising in 2022.