Industry changes lead to new demand for protective packaging and machinery

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Online shopping is more popular than ever, which means retailers around the globe are altering their packaging strategies to accommodate more frequent but smaller shipments. This inevitably means companies may need to update their protective packaging inventories with new materials or upgrade their packaging machinery.

Amidst changing customer shopping preferences, major carriers like FedEx and UPS have changed their rate calculation formulas to favor smaller, lighter packages. This has further incentivized retailers to evaluate their packaging strategies and make changes in an attempt to save money on shipping fees.

Given these major changes pertaining to e-commerce and direct-to-consumer shipping, it’s not surprising that growth is predicted for the protective packaging and protective packaging machinery industries.

Protective packaging to grow

ReportLinker recently released data that shows that over the next eight years, the protective packaging market will see increases of 6.7 percent per year. This will result in a total valuation of $50.39 billion by the year 2025.

Another report from MarketsandMarkets found a similar compound annual growth rate between the years 2015 and 2020. Data from this company showed that these five years would see 6.39 percent growth per year. This would bring the global protective packaging market to $35.82 billion by 2020.

Regional trends

North America and Asia-Pacific were found to be the top two regions driving demand. MarketsandMarkets reported that Asia-Pacific accounted for 37 percent of protective packaging value in 2015, which is in line with recent data regarding online shopping habits in this region.

“E-commerce sales in the Asia-Pacific region are expected to reach $1,892.07 billion by 2018.”

“This rapid growth in Asia-Pacific coupled with faster internet service and greater mobile uptake, is heating up the competitive landscape where large local players are increasingly vying for market share by improving their logistics and mobile platforms, and in some cases moving entirely to an app-only service,” Monica Peart, the director of forecasting at eMarketer, explained.

E-commerce is experiencing similar trends stateside as well. According to Internet Retailer, the U.S. rang up $335 billion in online retail sales in 2015. By 2020, 270 million Americans will be researching and purchasing goods online, and total sales will reach $523 billion.

Protective packaging machinery needed

As companies continue to alter their protective packaging strategies to accommodate the growth of direct to consumer shipping, new equipment will also be needed. According to PMMI, the Association for Packaging and Processing Technologies, the U.S. Packaging Machinery Market reached $10 billion in 2015. Shipments of this machinery increased 3.2 percent, spurred by international demand. PMMI found that the food and beverage industry is leading the demand for packaging shipments. Interestingly, the pharmaceutical and beverage markets are tied for the fastest growing market segments.

Different product categories have different packaging requirements and priorities. For instance, the biggest concern when shipping clothing is keeping it clean; when sending glassware, it’s preventing breakage; and delivering food requires careful temperature control planning and defending against contamination.

Companies may need to change their packaging strategies to appeal to consumers while also keeping costs down.Companies need to be sure their packaging strategies are compatible with changing carrier rules and consumer preferences.

As consumer preferences change, carrier regulations are adjusted and global trends continue to shape the protective packaging market, many businesses will find they need to move quickly and make intelligent packaging decisions to remain profitable. If you are unsure of how to improve your packaging operation’s efficiency or cost-effectiveness, reach out the experts at Pregis. Our packaging professionals will be able to give you individualized suggestions on how you can upgrade your operations to best suit your company goals.