North American Packaging Market Experiencing Significant Price Fluctuations Due to Rising Raw Material Costs.
The increasing costs of raw materials are causing significant price fluctuations across the North American packaging industry. Businesses relying on printed packaging materials struggle to remain profitable while keeping their products appealing and affordable. By recognizing and adjusting to these market changes, companies can stay competitive.
Why Are Packaging Prices Rising?
There are many factors that are driving up printed packaging costs. These include:
A Shortage of Packaging Materials
The supply of packaging raw materials has steadily declined over the years. This is due to the increasing demand caused by factors such as the growth of e-commerce and the demand for consumer-packaged goods. As the demand for packaging raw materials increases, packaging supplies become scarce and generally harder to acquire from suppliers. The limited availability has driven the prices of packaging materials through the roof.
Labor Costs
The packaging industry faces greater pressure from rising labor costs compared to other sectors. Manufacturers struggle with a tight labor market and a shortage of skilled workers. This forces them to attract talent by offering higher wages and improved benefits packages. The lack of skilled workers leads to operational inefficiencies and possible reductions in total production output.
Greater Energy Costs
Making paper packaging requires large amounts of energy. The manufacturing process for recycled grades, in particular, requires both power and fuel energy. Electricity prices in North America are projected to keep rising in 2025 due to growing demand and increased gas prices. The rising energy costs have strained the North American paperboard industry, leading to operational challenges.
Because of this, many North American paper mills have had no other option but to shut down. So, despite increasing demand levels, paper packaging capacity has decreased.
How Businesses Are Adapting to Price Fluctuations
With rising costs, businesses are finding new ways to manage expenses while maintaining quality. Here are some strategies being used:
Diversify Supplier Base
Businesses can diversify their supplier base to reduce supply chain risks. They can switch to other suppliers with better pricing if they experience price fluctuations on the supplier level. Companies should take supplier geographic locations into account when diversifying their supplier base. Companies that secure suppliers across different geographic locations reduce the risk of supply chain disruptions from natural disasters or geopolitical conflicts.
Optimize Packaging Design and Materials
Companies can reduce the effects of fluctuating raw material prices through effective optimization of their packaging design and materials. Instead of focusing on recyclable materials, they can opt for sustainable materials. The strategic approach will result in lower packaging costs over time.
Source Raw Materials Locally
Businesses can avoid costly import fees by buying packaging materials from local suppliers. By sourcing locally, companies can reduce transportation expenses and get faster delivery services and better-quality control mechanisms.
The Future of Printed Packaging in North America
The demand for printed packaging continues to increase despite price fluctuations. This has forced many businesses to find new ways to cut costs while maintaining quality. Businesses that embrace change and develop innovative solutions will be better equipped to handle fluctuating prices while maintaining their competitive edge.
