Three key issues facing the protective and transit packaging market

Three key issues facing the…
Three industry trends are providing incentives for innovation and are creating new opportunities and threats for players in the global protective transit packaging business.

Protective transit packaging is integral to the safe and efficient transport of goods from the factory to the retail floor, the commercial worksite, or the e-commerce customer’s doorstep. Protective transit packaging products and systems are vital components in the global $32.2 trillion (2016) commerce in manufactured goods.

According to new research by Smithers Pira, the global value of protective transit packaging products and systems totalled $112.3 billion in 2016, and is forecast to grow to $139.4 billion in 2022.

Despite the positive future for this marketplace, the protective transit packaging marketplace faces some significant issues and challenges. Industry participants are responding aggressively to many of these challenges, while others present significant opportunities for developing new protective transit packaging products and systems.

The rise of e-commerce

The rapid growth of e-commerce sales and distribution channels during the early 2010s is revolutionising the retail marketplace. Among the 28 EU countries, around 8% of consumer purchases in 2016 were via e-commerce channels. In the UK, over 15% of sales to consumers utilised e-commerce channels. This sales channel is rapidly transforming the landscape all levels of the supply chain.

While continued rapid growth of e-commerce will be driven by the convenience it represents to buyers, concerns such as these will impact protective transit packaging markets in at least four important ways:

1. Increasing demand for secondary and transit packaging

The pick-and-pack e-commerce methodology employs an additional cycle of secondary packaging and load unitisation, consuming an additional cycle of secondary and protective transit packaging materials. Suppliers of corrugated cartons, bubble wrap and small inflatable air pillows, and loose-fill packing peanuts, will continue to benefit in increased sales from this trend.

2. Additional distribution channel costs

In return for the convenience of online ordering and home delivery, consumers and their e-commerce suppliers incur substantial extra shipping, handling, and delivery costs. While many of these additional cost elements are intrinsic to the longer and more complex e-commerce distribution channels, minimising these logistics-related costs is a major goal of e-commerce participants.

3. Distribution channel inefficiencies

Reducing the amount of operator time spent in consolidating and packing the unique set of items that constitute each order is a priority of e-commerce order fulfillment centers. Orders are commonly packed in larger-than-necessary cartons and stuffed with bubble wrap or loose-fill packing. This non-optimum secondary packaging leads to non-optimum unitised loads. As a result, shippers and consumers sustain extra costs in the transportation and logistics system.

4. Recovery of packaging materials

An important consequence of this increasing demand for secondary and protective transit packaging materials is the large increase in the amount of packaging materials that must be disposed of at the end user’s location. This problem is abundantly clear to consumers who regularly purchase through e-commerce channels.

It appears that this packaging waste disposal problem has not yet generally risen above the level of annoyance to individual consumers. However, it represents both a threat and an opportunity, especially to suppliers of materials that are rarely used outside of e-commerce channels, particularly bubble wrap and packing peanuts.