The growing preference towards eco-friendly and sustainable packaging solutions that are manufactured of bio-degradable materials will drive the demand growth of the corrugated packaging segment. This will serve as one of the primary growth drivers in the paper and paperboard packaging market and will drive the spend momentum at a CAGR of more than 5% through 2023. Stringency in regulations that mandate the usage of bio-degradable packaging solutions will further contribute to the overall spend growth in the paper and paperboard packaging market.
Despite predictions of spend growth, the gradual increase in the price of raw materials that are essentially used to manufacture packaging materials will have an inflationary impact on the cost structure of suppliers. While this price rise will compel the suppliers to implement constant changes in their operational budget, they will tend to compensate for the same by increasing the prices of packaging materials.
"Possibilities of price rise of raw materials such as Kraft paper, wood fiber, glue, wood chips, ink, caustic soda, starch, among others will add to the manufacturing cost of suppliers. This will have an inflationary impact on the paper and paperboard packaging market price," says SpendEdge procurement research analyst Tridib Bora.
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What do the paper and paperboard packaging price trends indicate?
The recent paper and paperboard packaging market price trends hint at a significant rise in prices of recycled paper. Such a price hike is attributed to the sudden rise in demand from the e-commerce companies.
The distribution and warehousing costs involve expenses of the distribution of packaging materials as well as their storage cost. It is expected to increase owing to an expected hike in fuel cost, resulting in higher transportation and energy cost.
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What are the scopes of optimizing procurement spend in the paper and paperboard packaging market?
Engage with suppliers who can offer technical support and consulting on paper and paperboard grade selection, offer packaging value analysis, packaging volume optimization, among others. This will improve the ergonomics of packaging as well as reduce the cost incurred on packaging material procurement.
It is imperative for buyers to assess the logistics capabilities of suppliers to ensure that they can provide consistent delivery as per their manufacturing requirements. Packaging suppliers who have well-established supply chain and logistics capabilities, such as vertical/horizontal integration or partnership with different vendors and logistics providers, are usually resilient to supply disruptions as they can switch between vendors in case of such disruptions.
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