Some orders are delivered for up to 8-9 months, and the UK color box industry is facing great pressure! Steve, Managing Director of NewVisionPackaging (NVP).

Some orders are delivered for up to 8-9 months, and the UK color box industry is facing great pressure!

Stephen Shortland, managing director of New Vision Packaging (NVP), said the color box market in the UK was under "tremendous pressure" due to challenges related to Brexit and tight global supply chains. The implementation of Brexit has forced businesses to deal with changes in import and export and border regulations. Frank Weermijer, group chief executive of Customers Support, said that at present, the challenges facing the industry and the market as a whole, including the fact that companies must pay additional, separate import fees for the UK and the EU, must now provide a description of origin for specific export markets.

Some companies have concluded that post-Brexit trade changes cannot maintain their position in international supply chains and profit margins. Horizon, for example, has said it has no choice but to register a company in the Netherlands on the advice of officials from the UK government's Department of International Trade.

Global supply chains are under additional pressure due to rising energy and raw material prices due to the COVID-19 pandemic and the outbreak of force majeure in various fields. In conjunction with Brexit, EuPC President Renato Zelcher called the supply chain crisis a "perfect storm" of challenges facing the packaging industry.

Speaking about the state of the color box market, Shortland points out that due to these problems, the delivery time is long: "Last week, two new customers approached us, and at the time of quotation, the current delivery time for lottery box orders takes 8-9 months. The delivery time of their current order. The European Association of Color Box Manufacturers (ECMA) also pointed out the problem of long delivery times in a report released last year, increasing from 3-5 weeks to 12-20 weeks due to bottlenecks, imbalances between supply and demand and rising prices. EcMA's report reflects some of the broader challenges facing the packaging industry as supply chain shortages and bottlenecks appear to be intensifying.

In addition to the impact of the closure of production and manufacturing facilities in 2020 due to the global lockdown, a study by Smithers identified delaying necessary maintenance until 2021 as another reason for the delay in the packaging supply chain. For the plastics industry, the extreme weather events of Storm Uri in Texas in early 2021 meant that production of some of the world's largest manufacturers of polymers and derivatives came to a halt, which is estimated to have had a significant impact on production levels in Europe. Like domestic demand for cardboard in East Asia, this suggests a knock-on effect of predictable and unpredictable factors on supply differentials between regions.

While the plastics industry is in demand for applications such as food and personal care, the supply of raw materials is not keeping up, just like the cardboard industry, and is pushing up the price of polymers worldwide. Similarly, the prices of pigment raw materials and petrochemicals in the printing and ink supply chain have also risen, again due to closures and delays caused by the pandemic.

"Everyone knows that domestic paper and board production in the UK has been declining since the mid-1980s," Shortland continued, "and we are increasingly dependent on the European market. According to the 2020 Paper Industry Federation (CPI), 54% of the UK's packaging paper needs are imported from the rest of Europe to meet it. Now, with container supply issues and pent-up demand for fiber-based packaging, and online sales continuing to grow as high street retail recovers, brands seek to reduce plastic in their packaging portfolios, and delivery times and prices are soaring. It is clear that the demand for color box packaging has exceeded the current actual production capacity. ”

Demand has grown rapidly in recent years, reflecting changes in consumer behavior during the COVID-19 pandemic. For example, the growth of online retail means that some companies are struggling to fulfill orders due to a shortage of cardboard packaging in early 2021. Similarly, the rise of takeaway means that cardboard for food contact applications is in high demand, especially as consumers seek the sustainability of packaging.

Jo Bradley, Quadient's business development manager for packaging solutions, warns that because some paper and board producers ration even the largest customers, buyers must pay a high premium to get the packaging materials they need. Numerous surveys suggest that even after non-essential retailers reopen, online sales are unlikely to see any significant downward trend, so demand for cardboard will remain high.

Despite rising costs and supply issues surrounding cardboard packaging, it is estimated that e-commerce sellers continue to waste 30% of their products on this increasingly precious item by shipping orders in oversized cardboard boxes. "It has never been more important for retailers to reduce the amount of cardboard material they use in packaging and shipping operations, but many continue to pack outbound orders in boxes that are too large," Concludes Jo Bradley.

"But if we are now serious about seeing this type of lead time being quoted into jobs, I believe That European cardboard mills are reluctant to supply the challenging market of the UK," Shortland said. It seems that the UK's color box industry may continue to face challenges in the future, the market is facing huge pressure, and there seems to be no sign of any relief in the short and medium term. ”

Source: Global Printing & Packaging Industry (Parker Gini)

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