COVID-19 Impact on Corrugated Packaging in the Materials and Packaging Industry

COVID-19 Impact on Corrugated Packaging in the Materials and Packaging Industry

  • Materials & Packaging
  • Aug 07, 2020

COVID-19 Impact on Corrugated Packaging in the Materials and Packaging Industry

Corrugated packaging products are made of paperboards which are designed to give the extreme level of protection to the goods such as heavy, bulky, fragile or high value products in storage and transit. Corrugated packaging are manufactured in different sizes due to which products are used for packaging of small products to heavy duty products. Corrugated paperboard with many layers provides the strength to the packaging products and make them stronger than average cardboard and other packaging solutions. Corrugated paperboard also acts as the cushion for the product in transit for the electronics and dry products. Corrugated packaging product are 100% renewable and cost effective in nature and can be used for the replacement of wood and metal packaging which help the manufacturers in the cost saving. Corrugated packaging products are more used in the pharmaceuticals, consumer durables, movers and packers and other industries for the packaging and storing of the goods.

COVID-19 have impacted the corrugated packaging globally as the demand of the finished products have gone down which resulted in lower demand of the corrugated packaging. All the regions have to take the strict action towards the pausing of the increasing count of the coronavirus cases which leads to the lockdown in several regions. Hence, resulting into less demand of the consumer goods and raw materials in industry in the different regions which resulted into the loss to the corrugated packaging manufacturers during the pandemic situations.

The different kinds of corrugated boxes such as single-phase corrugated, single wall corrugated box, double wallboard, and triple wallboard are used in packaging and other applications in different industries such as food and beverages, office supplies, electronics and e-commerce. The demand of the corrugated packaging is increasing due to more demand of the bio-degradable and light weight packaging  but the demand in different industries have fall down which leads to the fall in the demand for corrugated packaging. In the pandemic situation, corrugated packaging manufacturers also have faced the difficulty in the production of the product as the operational cost have increased due to the less availability of the labor which increases the labor cost by 50% and raw material in the different regions that resulted in higher cost of production of the corrugated packaging products and lower the revenue generation for the manufacturers.

IMPACT ON DIFFERENT INDUSTRIES WHICH AFFECTED THE CORRUGATED PACKAGING MARKET

IMPACT ON ELECTRICAL AND ELECTRONIC GOODS

Heavy duty is a type of the corrugated packaging which is highly demanded in the packaging of the electronic goods for storing and during transit. During the COVID-19, the demand of the electrical and electronic goods has fallen down which has resulted into lower need of the heavy duty corrugated packaging. The import and export of the electrical and electronic goods for different countries have fallen down as due to lock down for several months which resulted in lower production of the electrical goods in the industry.

As China is the largest producer and exporter of the electronic goods such as mobile phone accessories, LCD, laptops and consumer electronic goods but due to the increase in the spread of the corona virus in the country, the export of the goods have been put on pause by the other countries through China which have impacted the corrugated packaging companies on the larger extend. The demand of small corrugated packing is more than the heavy duty corrugated packaging as most of the smart phones are packed in the corrugated packaging which increases its demand but during the COVID-19 situation, the demand of phones have fallen down which leads to low demand of the corrugated packaging in the electronic industries. The companies in the electronic goods have also halt the launches and production of the new models by seeing the low demand in the electronic market which affected the demand of global corrugated packaging market.

For instance,

  • Apple Inc. has already declared delays in iPhone productions during COVID-19 situation
  • Foxconn Technology Co., Ltd company has not yet confirmed the reopen factories and production of goods, Foxconn Technology Co., Ltd has stopped almost all of their production in China
  • The companies such as SHARP CORPORATION, Nintendo and SONY have also announced delays in their productions
  • Nintendo said the disruption in the production of electronic goods
  • SHARP CORPORATION could move production out of China due to the COVID-19 situation
  • Electrolux, an electronics appliances manufacturer has come in contingency mode
  • Facebook also resulted in a delay in the production of Oculus Quest Virtual Reality Headset
  • AT&S, a major manufacturer of substrates semiconductors and high-end printed circuit boards, delayed the production in China which is affected by the spread of the virus

IMPACT ON E-COMMERCEONIC GOODS

E-commerce industry is growing in the COVID-19 situation as due to the lock down in the countries, the demand for the products has seen an exponential rise in online purchase of necessity consumer goods including grocery and hygiene products which drives the growth of the corrugated packaging industry. As corrugated packaging comes in different sizes which can be used for the packaging of all kind of products. With increase in the spending on the e-commerce goods have positive impact on the demand of the corrugated packaging which helps to boost the global corrugated packaging market. As during the COVID-19, e-pharma, and e-consultations saw 55%-70% spike in the growth which helped in flourishing the corrugated packaging market.

As during the lock down in all the countries people were not allowed to move out of the houses but to the increase in the consumer goods consumption, the demand for the e-commerce product have increased which resulted in more demand of the corrugated packaging as home delivery was only the option left for the people. With the increase in the opening of the online grocery stores, personal hygiene products and home cleaning products, baby products with home delivery services have increased the demand of the corrugated packaging during the pandemic situation in all the countries.

For instance,

  • Peach (toilet paper) demand got rise by 279% during the COVID–19 situations as demand for the personal hygiene products have increased
  • Touchland (hand sanitizer) has a 10,000 waitlist on online platform
  • Soap sellers on Amazon are also selling out the products as the demand is increasing in bulk quantity

IMPACT ON AUTOMOTIVE

COVID-19 have largely impacted the production of the automotive and other spare parts as the demand of the automotive products have fallen down which leads in the lesser production of the spare parts of automotive. The production units have also halt in the production of the automotive machinery due to which demand of the import of the export of the automotive spare parts have fallen down which leads to the lower demand of corrugated packaging in the global corrugated packaging market. With the decline in the production of automotive, the demand of the corrugated packaging have also fallen down due to which corrugated packaging manufacturers have to face the losses during the COVID–19 situations. 

The demand of the passenger vehicles in all the regions have fallen down which resulted in the lower manufacturing of machinery and spare parts in all regions. As 18% of auto components gets imported from China and 30% of tiers are also gets imported from China to other countries. The corona virus have greatly impacted China which leads to lower production and import by the other countries and have also been stopped due to risk of spread of corona virus in the country which leads in the lower demand of the corrugated packaging in automotive sector. European automotive sector have faced unexpected crises as BMW and Volkswagen concentrated on their new products instead and European Automobile Manufacturers’ Association (ACEA) have also announced temporary closures of plants due to collapsing demand of automobile in the region, supply shortages due to supply chain disruptions with other regions.

 IMPACT ON SUPPLY CHAIN

The spread of the coronavirus, are not only affecting domestic income and demand but are also having large knock-on effects on global supply chains. Disruptions to travel across regions, workers staying at home and the authorities' own containment measures have led to factories operating well below capacity or even shutting down over the past weeks. Due to the shutdown of Chinese factories, many product categories have been affected and experiencing shortages of the finished products and raw materials also as in footwear industry which shows the 15.7% year-over-year decrease in imports from other countries due to the strict rules on import of goods during the pandemic situation from other countries. Several fashion brands manufacturers, are facing many challenges due to the interruption in the supply chain, manufacturers were not able to get the raw material as most of the manufacturers are producing products in China, which were stucked in China and resulting in delay in the sale of summer collections or inventory which is affecting the financial opposition of the manufacturers. Supply chain have been impacted by the COVID-19 as more of the ware houses have shutdowns which resulted in difficulty in transferring of the heavy spare parts of machinery or heavy duty products from one region to other due to which demand of the heavy duty corrugated packaging have fallen down in global corrugated packaging market.

PRICE OF WOOD PULP FROM JANUARY TO MAY 2020 (USD)

  FIGURE 1           WOOD PULP PRICE (2020) (USD)COVID-19 Impact on Corrugated Packaging in the Materials and Packaging Industry

From the above diagram, we can infer the fluctuation in the raw material price of the pulp wood which affect the production of the corrugated packaging. In January 2020, the price of the wood pulp was USD 138 which rises to USD 144 in February but price fall down in month of March to USD 136 and now increasing as in month of April with the price of USD 138 and again increases in month of May to USD 142. With the fluctuation in the raw material prices, the manufacturers have to face losses as with the decline in the demand of goods due to the effect of corona virus in the month of March, the prices of wood pulp have fallen down but the e-commerce in the several region have increased which have positive impact on the corrugated packaging and thus, the piece of wood pulp have also increased.

CONCLUSION

On concluding, as the spread of COVID-19 pandemic around the globe have hit all the sectors of production and almost on all the industries, the demand of the finished products have fall in the countries which resulting into the lower import and export of the goods with other regions which have negative impact on the corrugated packaging product manufacturers. The demand of the electronic goods have fallen down due to which demand of the corrugated packaging have also falls down as more corrugated packaging is preferred for electronic goods. The auto motive sector and supply chain company have been impacted by the COVID-19 as demand of the spare parts of automobile in the different countries have fallen which needs the corrugated packaging and due to danger of spread of more COVID-19, the countries have stopped the import and export of the raw materials as well as of finished goods which have impacted the supply chain industry.

Eventually, the e-commerce industry have the positive impact on the demand of the corrugated packaging as corrugated packaging comes in every size and during the COVID-19 situation, the demand of the consumer goods have increased which have positive impact on the corrugated packaging in e-commerce industry. The fluctuation in the raw material price which is wood pulp during the pandemic situation has also impacted the revenue of the corrugated manufacturers in the global corrugated packaging market.

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