The year 2021 has been a transformative one for Industrial packaging solutions. On the one hand, their role as an essential element to protect products and guarantee they reach their final destination efficiently has been confirmed. However, the sector has also had to navigate new consumer behavior trends and the difficulties of a post-coronavirus scenario.
Facing these challenges, companies have been forced to adapt, produce faster and more efficiently, and develop new formulas, such as sustainable packaging solutions.
While such enormous transformations might seem overwhelming, they also present significant opportunities for growth. Keep reading to find out the challenges faced by the sector and the different solutions that are shaping industrial packaging for the years to come.
Why has the industrial packaging sector changed in the last year?
The global industrial packaging solutions market size is projected to grow from USD 58.8 billion in 2020 to USD 72.6 billion by 2025, at a CAGR of 4.30%, according to figures published by Markets and Markets.
However, this growth has in part been hindered by a number of factors:
The pandemic and its effects. During the coronavirus crisis, the industrial packaging solutions sector has seen trends in opposing directions: while demand for some products plummeted, other products were more in demand than ever (including the medical industry).
This was combined with shortages of certain packaging materials (such as cardboard or timber) and diverse disruptions in the supply chain caused by restrictions in movement (which saw trade slowing and stopping unpredictably). All this caused extreme uncertainty for the industrial packaging solutions market.
Demand for sustainable packaging solutions. Consumers’ increased environmental awareness is driving companies to rethink their packaging solutions. While some have turned to paper-based packaging, many packaging solutions companies have also started seeing sustainability from new angles. This translates into picking the right plastic solutions, such as EPS or EPP, that allow for recyclability, reusability, and circular economy models, all while guaranteeing product safety.
The industrial packaging solutions sector has also seen rapid transformations boosted by the rise of e-commerce, a trend that had begun before 2020 but that was magnified by the coronavirus crisis.
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The challenges that the industrial packaging solutions sector face today
The post-pandemic situation in the packaging industry
The post-pandemic landscape delineates at least two challenges for industrial packaging solutions.
First of all, it’s necessary to develop systems that can be resilient to changing and unpredictable demand peaks and drops. This is especially true for industrial packaging solutions, as they’re tightly linked to GDP trends and industrial activity levels and, thus, can be easily affected upon any economic crisis.
On the other hand, companies must also come up with purchasing and logistic strategies to avoid packaging material shortages, including ensuring adequate inventory levels. They must also be ready to face price imbalances or take advantage of price opportunities. For instance, the post-pandemic landscape saw crude-oil prices falling with the consequent fall for oil-based raw materials, such as plastic.
Changes in consumer behavior and business models
E-commerce shipments have continued accelerating in 2021. This translates into increased demand for protective industrial packaging solutions.
However, this growth has had a number of different impacts on any company that needs industrial packaging. These include additional costs for shipping, handling, and delivery, increasing demand for secondary and tertiary packaging, and the need for efficient distribution channels. In light of these, companies must rethink their logistic strategies, including their choice of industrial packaging solutions.
The digitalization of the industry
Investment in automation and digitalization is one of the main ways industrial companies have adapted to new logistic challenges. For instance, the use of smart packaging solutions allows for real-time traceability of shipping units, as well as information about their state (for instance, their temperature or humidity levels), anticipating potential contingencies.
However, digitalization poses its own challenges: from accommodating robotic machinery and human operators to redesigning logistics into a whole new, digitized system.
While the adoption of new digital and automation technologies might be challenging, it’s also a way to reduce packaging and logistic costs in many ways (such as minimizing human labor or eliminating inefficiencies).
Increasing demand for sustainable packaging solutions
Companies must rethink their industrial packaging solutions to match both consumer demands and governmental legislation. Sustainable packaging solutions include the need to generate less packaging waste decrease the carbon footprint, which can be achieved through several actions:
- Choosing recyclable materials
- Employing reusable packaging options
- Optimizing the number of packaging materials, particularly those used in secondary and tertiary packaging. This translates into less packaging waste and less transportation fuel consumption, minimizing the associated carbon footprint.
- Taking part in circular economy models where companies guarantee the recovery of packaging waste and give it a new use.
These 4 actions speak of a new, holistic way of understanding sustainability, which goes beyond reductionistic measures such as ditching plastic solutions altogether without other considerations.
In fact, plastic-based materials such as EPS or EPP are more and more understood as sustainable packaging solutions, because of their characteristics:
- Made of 98% air
- 100% recyclable
- Manufactured using steam as a main source of energy
- Can be integrated into circular economy programs, such as Knauf Circular, which guarantees to give a new of life to expanded polystyrene waste by turning discarded packaging materials into new
Global shipping optimization and transport capacity
24% of the volume of the average shipping container is empty space, following figures published by DHL. This poses a significant issue for increasingly complex supply chains, where transport space optimization can translate into important cost savings.
The use of customized industrial packaging arises as one of the most efficient solutions for this issue, translating into lower packaging and transportation costs and solving shipping inefficiencies.
At the same time, transport and global shipping are required to be increasingly flexible in order to meet a fluctuating demand: from less-than-truckload systems to demand peaks that require extra transportation.
The right industrial packaging solutions can also facilitate this process, including shipping systems that are lighter and easier to handle and to be brought together into palletized shipping units.
All in all, the industrial packaging solutions sector now faces a time for a number of challenges that can turn into strong opportunities if companies adjust using the right packaging systems.
Learn more about these possibilities in our free Technical manual about expanded foam in the industry.