What 2021 has instore for the packaging industry
GWP packaging experts make their predictions for the next 12 months
It may seem unwise to try and make predictions after everything the previous twelve months has thrown at us, but with Brexit mostly done, the promise of Coronavirus vaccines and the hope of a return to something approaching normality, that is exactly what the team at GWP have (attempted) to do.
Each of the senior directors and managers across the various parts of the GWP Group have put forward their predictions, hopes and expectations for the coming year. As a result, this covers a broad range of topics, including:
- The ongoing drive towards ecommerce
- A renewed focus on sustainability
- How the economy may fare in 2021
- And much more besides
Please continue reading below to see the 2021 predictions and emerging trends from GWP’s packaging experts, or use the table of contents to go straight to your specific area of interest. Please feel free to share your own thoughts and predictions with us on our social media channels too (including Facebook & Linkedin).
Quick Reference / Contents
01: Raw Material Supply
David’s involvement with corrugated goes back 30 years, having joined the fledgeling Great Western Packaging Co (as GWP used to be known) back in 1990.
His in-depth knowledge of the corrugated market and what constitutes successful packaging, makes him perfectly placed to offer his thoughts on what 2021 will hold.
Raw material shortages and price increases will pose challenges
As everyone is aware, COVID-19 caused a huge amount of disruption in 2020. And although it created huge uncertainty in the UK economy, it actually led to a higher-than-normal demand for corrugated packaging.
What this did however, when combined with supply problems brought about by national and regional lockdowns, was to lead to material shortages.
In fact, at the time of writing (early January 2021), this shortage of material continues to see corrugated sheet board lead times becoming ever extended, with demand exceeding capacity. We are now at the point where corrugated mills are quoting delivery of sheet board well into February.
In the worst cases, this is meaning packaging manufacturers not being able to supply inventory to customers, delaying fulfilment of orders and harming their productivity.
GWP have worked tirelessly to maintain supply through this period – albeit with extreme difficulty. This has however enabled GWP to make sure we are able to meet our customers’ requirements and will continue to do so.
Whilst the hope is that the picture will improve, this is not looking likely before the middle of 2021 at the earliest.
Material shortages leads to price increases
The rules of supply and demand of course mean that with less material available and demand increasing, costs will also go up.
As such, paper mills across Europe and the UK announced they would be increasing prices at the end of 2020 – with these changes coming into effect from the beginning of 2021.
The obvious knock-on effect is that the price of corrugated packaging is increasing in line with this. Whilst some of the cost will be absorbed by converters like GWP, it is inevitable some that price increases will regrettably be passed to businesses that purchase packaging, as well as end users themselves.
This issue is not confined to corrugated however, with increases and shortages being seen in many other commodities, particularly wood and foam.
Focus on innovation and efficiency
Whilst is obviously difficult to frame price increases in a positive light, there may be some silver linings to this over the next 12 months.
For example, it is likely to force businesses to analyse their packaging and look for ways to improve it. Bulky, inefficient packaging will make way for streamlined designs that minimise material usage (and therefore costs). This has the potential for environmental benefits too.
Other strategies such as rationalising inventories (to take advantage of economies of scale), minimising packing times and reducing transit costs are all likely to become more prominent in order to offset any rise in material costs.
This makes it all the more important for businesses to work alongside a packaging manufacturer that can offer innovative designs and tailored services to achieve this.
02: Shift to Online Selling
Jay Daggar has been working for GWP since mid-2008, having previously studied on the now famous Packaging Design course at Swindon College / Cranfield University.
Taking a hands-on approach to helping customers and staying abreast of developments in the packaging industry, Jay has predicted a number of potential developments for the following 12 months.
Shift to online sales continues
Although it was happening anyway, the shift to ecommerce for the vast majority of businesses was accelerated considerably by the Coronavirus pandemic.
With the majority of consumers being stuck at home for long periods, as well as the ubiquity of Amazon helping even those with traditional shopping habits to move online, ecommerce sales have soared beyond all expectations.
But what are all of these online orders delivered in? Corrugated packaging of course.
The result is that established ecommerce players have seen a requirement for more and more cardboard delivery and postal packaging, whilst many businesses entering the space or ramping up their efforts have been required to source and / or seriously evaluate their ecommerce packs for the first time.
As with material shortages mentioned by David elsewhere in this article, it has ultimately meant higher demand for corrugated packaging that only looks like it will continue to grow throughout 2021 and beyond.
Print and presentation becomes more important
With the decline of the high street and physical retail, an organisations’ ecommerce packaging is in many cases the first physical interaction that consumers will have a business or brand.
As such, the next 12 months is likely to see an increasing focus on print quality and graphic design (specifically relating to ecommerce packaging), with rivals looking to gain an advantage and provide segment leading “unboxing experiences”.
Add this into the prevailing consumer sentiment of needing to be provided with relief from the current situation, and there is also shift towards bright, bold colours for printing on ecommerce packs. The aim will increasingly be to surprise and delight customers when they receive their items, as well as fostering brand loyalty (and even gaining new customers through word of mouth and YouTube unboxing videos).
Another key trend for print is that of using white and green inks on kraft (i.e. brown) material to reflect businesses’ environmental credentials (another area that is still seeing attention despite the pandemic).
It is likely therefore that it will become increasingly important for businesses to leverage their printed branding – particularly in competitive markets – during 2021.
Fulfilment pressures make business think beyond the box
The shift to ecommerce has not only put pressure on packaging supplies, however.
With consumers placing higher volumes of orders – and expecting next or even same day delivery in many cases – the strain experienced in fulfilment centres is likely to increase as well.
This makes it essential for businesses to have well trained fulfilment teams, making the most of advanced tactics for picking and packing of orders.
Whilst this includes the need for well-equipped warehouses – utilising picking bins and pick face walls – easy assembly packs including crash lock boxes or custom sized packaging to minimise void fill (and the cost / process of adding this) will become ever more important too.
This is likely to see many businesses investing in improving warehouse and packing operations in 2021, simply to keep pace with consumer expectations.
03 Coronavirus Restrictions
Ruth, as one of the founding directors of GWP, has been involved in the packaging industry since 1990.
This level of expertise and experience – when combined with her detailed knowledge of running a successful manufacturing business – means she is able to provide insight about how businesses are likely to fare in 2021. Her predictions and thoughts are below.
Coronavirus restrictions provide ongoing challenges
Although there is light at the end of the tunnel, the ongoing Coronavirus pandemic, and the government restrictions to control it, are likely to pose businesses serious questions until at least the middle of the year – and possibly beyond.
Whilst the packaging industry is seeing very strong demand at present, this has the potential to drop off if more and more businesses begin struggling due the economic situation.
Other perils include partial or full shutdowns of manufacturing businesses if there are outbreaks of COVID 19 – a situation that not only affects the business in question but all of their customers and suppliers that form the supply chain too.
Sadly, many businesses are likely to close permanently due to these factors.
However, those that remain will emerge leaner, stronger and more agile, potentially helping to improve the economic picture in the UK for years to come.
This – alongside potential ongoing disruption to international shipping – could lead to further increases of “reshoring” (i.e. bringing manufacturing back to the UK). The potential boost this could provide to the UK manufacturing sector (not to mention the jobs market) is perhaps the greatest positive that can be taken from the current situation.
Mental health of employees must be a key consideration
Whilst great strides have been taken in recent years, the mental health of employees must remain a key focus for businesses in 2021.
Difficulties with working from home, staff members shielding or understandably nervous about the ongoing risks from Coronavirus, reintegration of furloughed employees and uncertainty surrounding job security, are all factors that may be weighing on employees’ minds.
As such, clear, honest communication will be increasingly important over the next year (although this is obviously best practice anyway – it is surprising how many companies overlook this), as will understanding and spotting the signs of employees that are struggling for whatever reason.
The upside of the current working restrictions is the potential for employees that are much more engaged and that form much closer-knit teams, having worked together not only to get their jobs done, but also to ensure each other’s safety.
04: Reappraisal of Sustainability
Ian has worked at GWP since 1995, focusing in particular on both the anti-static and returnable packaging areas of the business.
Heading up GWP Correx® – one of the largest manufacturers of custom sized totes and handling products in the UK – he is perfectly placed to offer his observations and predictions regarding 2021. Please see below for his thoughts on the coming year.
Sustainability is not just about recyclability
Blue Planet was undoubtedly a fantastic and very important piece of film-making. And it is correct in highlighting the urgent need to reduce the use of single use plastics throughout the globe.
But the key part of this statement is the “single use” aspect.
The basic assumption that many took from the documentary was that all plastic was bad, and all cardboard (or biodegradable materials) were good. And whilst this has in part contributed to the growing demand currently being seen for corrugated, many businesses are now seeing that returnable and reusable packaging can actually have less environmental impact over the longer term.
As such, 2021 has the potential to see more businesses switching to returnable totes (such as those manufactured from Correx®). Whilst this may partly be driven by shortages of cardboard material, it is equally likely to be because businesses reassess the economic and environmental benefits of doing so.
Further growth of Correx® material use
Correx® (corrugated plastic) use has been growing steadily over the past few years – and 2021 is likely to see this trend continue.
As mentioned above, many companies are switching to returnable packaging for a number of reasons. But moulded plastic containers can often create as many problems as they solve. Typically, the most common barrier to adoption is stock sizes that are not suitable, and which result in inefficient shipping.
Correx® resolves this by offering comparable performance to moulded plastic containers, whilst offering the size flexibility of corrugated cardboard. This in turn can lead to much more efficient transit, reducing costs and emissions.
The versatility of the material also means it is increasingly being used in other applications, such as retail packaging and even POS displays – something I believe we will see more of in 2021.
05: Change of use for Foam Materials
Richard has worked across a range of positions at GWP Protective – covering everything from manufacturing roles in the factory to sales and customer support – eventually becoming General Manager in 2014.
His knowledge of both the foam and protective case markets is amongst the most in depth within the UK, making him the perfect candidate to predict what will be in store for 2021.
Foam use to focus on efficiency, rather than sales?
One of the key uses for bespoke foam inserts is for product presentation. This can either be as part of retail packaging and gift boxes for end users, or for use in sample cases for sales pitches / presentations.
With the move to online shopping potentially reducing the requirements for luxury retail packs – and coronavirus restrictions virtually halting face to face sales meetings – the demand for this type of foam is likely to be considerably lower until the middle part of the year at the earliest.
Where there is likely to be increased use however, is for sales engineers and service technicians.
People in these roles will potentially have greater exposure to Coronavirus (the nature of their roles means they are not able to work from home), so efficiency will become more prized. This will mean foam inserts becoming increasingly important for protecting and organising equipment, allowing employees to minimise time spent on site.
One other consideration that was also highlighted in 2020 is the versatility of foam. At GWP for example, we manufactured a large number of foam components that have been used in the production of safety visors for the NHS.
2021 could well see foam being used in a number of other versatile ways, either to help in the fight against the pandemic or as things slowly begin to return to normal.
Material shortages not only affecting corrugated
Although the ways in which foam may be used have the potential for change, another prediction is looking likelier by the day – that 2021 will see shortages (and therefore price pressures) on foam materials.
Whilst this partly driven by demand, there are other factors at play.
This includes local lockdowns affecting production at factories, with certain manufacturers of raw materials also potentially going out of business. Add in additional paperwork and customs checks due to Brexit (and the delays this may cause) and certain grades of foam could potentially be in short supply this year.
GWP Protective – having more than 25 years’ experience of foam materials and their properties – are fortunate in that we can usually offer alternatives to the specific material grades that are likely to be in short supply, whilst using advanced software to ensure that performance is not affected in any way.
06: Economic Performance Factors
Ian, having been part of the GWP business since day one, has more than 30 years’ experience in the packaging industry. This expertise covers the wide span of products that GWP offer – everything from corrugated through to foam, protective cases and even multi trip / returnable.
This detailed yet broad knowledge makes him ideally placed to offer his thoughts on what the next 12 months may hold.
Performance of the economy to heavily influence packaging market
It is typical for the sales and revenue performance of packaging companies to be a bellwether for the UK economy.
If consumers are buying less goods, manufacturers are producing less and general activity is declining, then the volumes of packaging required will also drop. This was seen particularly clearly after the economic crash back in 2008.
However, despite COVID-19 creating the biggest drop-in economic activity in the UK for hundreds of years, the packaging market has remained buoyant.
This is obviously in part due to the shift to ecommerce as covered by my colleagues elsewhere, but also partly due to the economic stimulus and measures implemented by the chancellor.
Saying that, with the longer-term effects of Brexit still unknown, raw material prices creating pressure on businesses and large-scale uncertainty in certain sectors (not to mention the prospect of high levels of unemployment), it is very hard to predict how the economy – and by extension the packaging sector – will fare.
My prediction? Cautious optimism that the UK economy – and manufacturing in particular – will emerge stronger towards the end of 2021.
Environmental considerations to remain a strong factor
Perhaps surprisingly, the other main way that changes in economic activity can be observed is through how much focus is given to environmental concerns.
Although GWP will always look to promote eco-friendly solutions, during times of economic hardship this tends to be less prominent amongst the thoughts of businesses that use significant volumes of packaging. When times are good, it moves up the agenda again.
This time, things feel different.
Even with the pandemic, Brexit and everything else that has happened over the preceding 12 months, environmental concerns remain much more of a focus across our customer base and the industry in general.
Many customers are now demanding FSC certified packaging and switching from plastics to corrugated materials (which can often be achieved by employing a high level of design and engineering expertise).
As my colleague Ian mentioned however, there is also starting to be a realisation that returnable packaging setups can often have a lower overall environmental impact.
Ultimately, it seems as though the majority of businesses – and consumers – are starting to make genuine efforts to be more sustainable over the longer term. This is something I predict will be seen more and more over the coming twelve months.
07: In Summary
The packaging market in 2021
Although the first 6 months 2021 (at least) are potentially shaping up to be turbulent for the packaging industry, there is some hope that things will return to something approaching normal towards the middle part of the year.
It will be interesting to see which of the developments that we have witnessed over the past twelve months will become permanent fixtures (such as ecommerce growth) and those that may eventually return to previous levels (such as material usage or economic activity).
Whatever happens this year, GWP will be happy to help and assist with any packaging requirement your business may have. So, if any of our 2021 packaging predictions are creating problems – or opportunities – for your business, please get in touch.