E-Commerce Packaging Holiday Price Increases and Shortages
After four decades in the industry and 13 years of being almost totally focused on DTC eco-friendly packaging, I can tell you with great certainty there is trouble ahead for many companies that require e-commerce packaging. This year, more than any previous year before, several negative market factors are going to come together to hurt and disappoint many who simply started too late.
A few of the key negative packaging market factors include:
Long packaging lead times – while true material shortages are spotty and rare, the biggest problem manufacturers are experiencing today is labor shortages. Many plant/production people simply don’t want to come back to work. Producers previously able to run three shifts are working only two shifts due to lack of workers. Machines sit idle lacking operators to run them. There truly are only so many hours in a day and in production. Expect lead times on new projects to extend to a solid 4 to 6 weeks, or longer! So, if you want packaging by Thanksgiving, orders need to be placed no later than mid-October.
Transportation issues – shortages of equipment and drivers has become common so transit times have increased as have shipping cost rates. This is not likely to correct any time soon, especially with the busiest time of the year and nasty weather right around the corner. You will pay more in October and November to ship anything, anywhere, than you will in August or September.
Packaging costs – The paper packaging industry, including corrugated and paperboard, are almost certain to put through another price increase before the end of the year. That will make three increases this year, and there is no defense against that. If we look at the rising labor and transportation costs above, some increase may be justified but certainly manufacturer’s greed is a factor as well. I would not be surprised to see a MINIMUM of an additional 6 to 8% increase in September or October.
Holiday Season planning or panic?
Some may think we are being pessimists or alarmists but the history of our blog writing and forecasting proves we are right much more often than we are wrong. Our job is to protect our customers and we do our job well. When the most recent June price increase was announced most of our key customers already had orders in the pipeline and the increase had minimal negative (cost and delivery) impact on their business.
If your current box and packaging supplier is not talking to you about this situation, perhaps you have the wrong supplier. Give us a call at 630-551-1700 or contact us through this web site. We will be glad to discuss your specific situation or project.
As a good friend used to say, “the future is now” this year he would not be more right.