Market Trends of North America Protective Packaging Industry
This section covers the major market trends shaping the North America Protective Packaging Market according to our research experts:
Increasing Trend of E-commerce to Augment the Market Growth
- The demand for protective packaging in the e-commerce industry is set to witness unprecedented growth due to rapid strides in the sales of consumer electronics in e-retailing. This market segment was non-existent a decade ago. However, the pace of change in e-commerce has picked up and given rise to this fledgling segment in the e-commerce protective packaging market.
- E-commerce has become a superior choice for consumers to purchase goods during the last decade. The rising internet penetration, growing access to the internet across most of the population in developing economies, increasing smartphone penetration, increasing technology, and rapid urbanization have created a massive opportunity for the e-commerce market.
- The market's rapid growth is primarily driven by fashion and apparel, consumer electronics, and personal care industries. Considerable investments in the consumer electronics, personal care, and fashion and clothing end-user industries are creating scope for expansion of packaging opportunities such as protective packaging.
- In the United States, e-commerce continues to grow dramatically, putting pressure on traditional retail. Also, sales of consumer-packaged goods, long confined to conventional retail channels, are exploding online, with growth rates, in many cases, more than 50% Y-o-Y. Also, the Q4 2021 retail e-commerce sales accounted for USD 244.144 billion, according to the US Census Bureau.
- Moreover, when it comes to packaging for online shopping, an enjoyable unboxing experience, where the consumers experience receiving, opening, and engaging with primary and secondary packaging, is also a major factor that can help drive consumer engagement, ultimately driving brand loyalty. Protective packaging allows e-commerce players to package their products where the unboxing experience for consumers remains good without any product damage.
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The United States Holds a Significant Market Share
- The region is witnessing significant demand from the consumer electronics segment. According to the Consumer Technology Association, the consumer electronics industry in the United States is expected to grow by 4.3% Y-o-Y. With the increasing demand for consumer electronics, the need for protective packaging will likely increase during the forecast period.
- Consumer durables are items that consumers use for an extended period, usually for years. Hence packing is crucial to ensuring that these products get to the consumer in pristine condition. Such products frequently carry the risk of being handled improperly while being transported. These are also susceptible to stress and vibration. As a result, packaging becomes difficult, and protective packaging is often used.
- According to the United States Census Bureau, exports of durable goods totaled USD 2922.98 billion in 2021, up 11.26% over the previous year's value of shipments of USD 2627.16 billion. The country's consumption of protective packaging may increase due to the sharp growth in exports of durable goods. Regional vendors are innovating and offering various protective packaging products in the region. Moreover, the area has been witnessing new partnerships and merger and acquisition activities to address new challenges emerging in the market and drive growth.
- For instance, in October 2021, Altor Solutions acquired the protective packaging firm Plymouth Foam for USD 56 million. Plymouth Foam offers custom protective packaging, cold chain packaging, and internal components made from expanded polystyrene and polypropylene. The partnership enables Altor to access a range of clients across different end markets in the United States, including food and beverage, pharmaceuticals, recreational vehicles, and construction.
- However, as supply concerns mounted, merchants like Amazon began storing cardboard to fulfill demand, leaving smaller firms without supplies. According to the Producer Price Index and the US Bureau of Labor Statistics, the price of cardboard hit a new high in February 2021. In July 2021, International Paper, one of the country's top suppliers of containerboard and corrugated cardboard, warned investors that the supply of cardboard boxes was "very low," with supply chain bottlenecks continuing into the rest of the year.
- In January 2022, Ohio-based Greif Inc., industrial packaging products and service provider, announced that it is implementing a USD 50 per ton price increase for all grades of uncoated recycled paperboard (URB) and a minimum 6.0% increase on all tube and core and protective packaging products. The company stated that an increase in protective packaging products would be effective with shipments on and after March 2022.
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