Covid and Online Shopping: The Perfect Storm Demand for Packaging Supplies Meets Shortage of Raw Materials
Before COVID, online shopping was on the rise, but once the pandemic hit, online shopping became a way of life for many. As a result, the demand for packaging so that products can be shipped to customers’ homes rose sharply, and today it remains at an all-time high.
Those in need of packaging materials are hyperaware of the challenges in the current environment. Their suppliers are seeing shortages in raw materials used to make the products they rely on, which is exacerbated for small to medium companies who don’t have the purchasing power of large companies like Amazon, who get their orders fulfilled first.
When challenges come together this way, it also drives up prices. Added to that are the increases in freight charges and a shortage of labor. Prices have gone up significantly over the past 18 months, and I anticipate an increase of 7-14 percent in plastics, 3-5 percent in adhesives, and 10 percent for corrugated paper, which goes up about every two months.
Prices rising are due to this perfect storm of shortages in labor and raw materials together with an increase in demand. For those struggling to get packaging, especially branded packaging, consider using plain boxes with tape that has your company branding.
Regardless of which avenue you choose, it is advisable to order packaging supplies as soon as possible. Holiday packaging design should begin in January, while ordering for general supply should be done at least seven months ahead.
It isn’t only our industry that is experiencing shortages in raw materials. Labor shortages continue to disrupt the supply chain as workers continue to catch Covid. Through this, people are becoming more educated on how one area of the supply chain can affect everything down the line.
How We Got Here
Beginning in the late 1990s, online shopping has grown to the point where today, people have—and still are—changing their buying habits.
This has only increased the number of packages sent to consumers and has made a tremendous impact on the amount of packaging supplies needed to keep the supply chain moving.
As the online shopping trend keeps its current pace, its impact on brick-and-mortar stores has resulted in many of them closing and moving to an online model only. It wasn’t long before businesses discovered that they could utilize online sales to drive profitability and reduce overhead.
Pressure and demand increased for online stores to meet consumers’ demands for goods, and it also affects their suppliers, who are struggling to hire the number of workers they need to keep up with demand, not to mention growing.
When companies cannot produce even the minimum the industry needs, it becomes a snowball that grows as it rolls downhill. Because people were forced to stay home, they were, in a sense, forced to purchase goods online instead of going to stores to buy them. This increased demand for shipping supplies globally, to a level we have never seen before.
Today’s trends are about the challenges that manufacturers and suppliers in our industry are dealing with. Adding to the challenge of manufacturing the volume of packaging supplies needed is the fact that there are a limited number of paper/box manufacturing facilities today. Thanks in part to newspapers and books going digital, many paper mills shut down years ago.
There are also shortages in petroleum products used in manufacturing everything from adhesives for tapes to acrylic tape, poly bags, and other plastics. We have seen many suppliers struggling in one way or another as they work to meet demand.
To top it off, consumers’ buying habits have changed drastically and, at least for the immediate future, we don’t see any changes to that. They have discovered that it is extremely convenient, they save time, can find a bigger selection, there are more options, and they often find better pricing online than in local stores.
Other trends that we are seeing include prolonged staffing shortages, shipping costs that continue to rise, new freight companies entering the market, huge increases in lag time to produce items such as plastic bags (from four weeks pre-Covid to six months today), and custom printed takes much longer.
We have suggested customers use customized stickers with non-custom packaging supplies to get their products out the door faster. We’ve even had clients who couldn’t get plastic bottles, like the ones used for spices, and it delayed their dreams of bringing a new product to market.
The best advice I can offer is to plan far ahead and order earlier than you think you need to.
Nicole DeJoris is president of Pinnacle Packaging, Inc. in Lombard, Illinois. She believes that packaging is more than what’s on the outside; it’s what goes inside, too. Pinnacle Packaging makes sure customers are prepared and informed about the offerings available to their business so they can create a lasting impression through packaging.