With the world is the midst of an unprecedented shipping crisis sparked by an extraordinary chain of events, prices have skyrocketed across the board.
We have already seen stretch wrap films doubling and this could well be only the start as rationing is now being talked about.
Packaging is in the eye of this storm creating an extraordinary situation for many companies that is becoming increasing challenging to manage.
The shipping crisis: a perfect storm
As communities went into mandated Covid lockdowns worldwide, consumers turned to online shopping for everything from clothes and homewares to televisions and trampolines.
The resulting tsunami of orders put unprecedented pressure on China and its neighbours where much of the world’s produce and materials originate, and sent the cost of a container soaring to more than four times its typical price.
Yet the chaos didn’t stop there. As buying habits switched online, so did the shipping process.
The usual bulk orders from retail stores typically sent to their high street stores for sale and distribution, were replaced by individual consumer orders, independently wrapped and packaged and filling containers loads one by one.
On arrival at key ports, the plethora of individual consumer packages threw the unloading process into disarray, with the typical 48-hour timeframe for unloading containers delayed in some cases by up to five weeks.
As overworked and exhausted stevedores drop one by one, and seafarers essentially trapped at sea due to Covid restrictions, manpower wasn’t sufficient for a normal day’s shipping, let alone one in the grips of a Covid-fuelled online shopping frenzy.
Materials shortages and the impact of Brexit
By Christmas 2020, the world was also experiencing record volatility in global supply chains as heightened demand caused havoc with production schedules.
In December, Honda temporarily paused production of its Civic branded cars at its Swindon plant in the UK due to a shortage of parts, while many other manufacturers across the globe advised their clients they were to temporarily suspend the placement of new orders.
Brexit only compounded the issue when on 1 January, all goods traded in the UK were subject to new rules that saw hundreds of lorries backed up at border checks.
In response, many freight carriers sailing from Asia chose to avoid the disruption and head directly to European ports such as Rotterdam, Zeebrugge and Hamburg. This only created more chaos as space was desperately sought to carry transiting goods on ships headed to the UK.
Bad to worse – blockage in the Suez Canal
Like any gripping thriller, the shipping crisis and goods shortage went from bad to worse, when on 23 March 2021 the 400 metre long, Taiwanese operated Ever Given container ship ran aground in the Suez Canal, blocking the busy shipping route and triggering a jam of hundreds of shipping vessels and losses of more than €7billion a day.
While the ship was dislodged seven days later, the impact of this latest shipping disaster is continuing to be felt.
Approximately 12% of all the world’s trade moves through the Suez Canal, which equates to about 30% of the world’s shipping containers.
While European ports typically receive about 50,000 containers a day, backed up cargo from the Suez Canal jam – plus that which was rerouted around the Cape of Good Hope – will arrive at ports all at once, creating unimaginable congestion not only at the ports, but for trains and trucks transporting the goods to their next destination.
The result? Potentially months of delays, empty shelves and good shortages, and the inevitable skyrocketing of prices as businesses pass on costs, right as Ireland is set to ease lockdown restrictions and cautiously re-open the economy.
What the shipping crisis and materials shortages mean for packaging
A shortage of packaging materials is another unfortunate consequence of the COVID-19 pandemic.
The insatiable demand for Personal Protective Equipment (PPE) sparked a manufacturing boom in China where the vast majority of PPE is made. Polymers that were previously used to manufacture stretch films and adhesives for the packaging industry have instead been used to make PPE healthcare products such as disposable gowns, gloves, masks and visors.
The solar panel market in China is also now gobbling up polymers where once there was no market.
The result is a worldwide shortage of polymers that are traditionally used to make packaging, sending the cost of packaging through the roof.
If you are finding it hard to source packaging materials, you may be thinking about switching suppliers.
Our advice is to hold firm; as large manufacturers make every effort to protect the materials already allocated to their current customers, it is unlikely supply will be available to you if you switch.
Although it may be of little comfort, the fact is this is a global problem that will continue to affect businesses in every corner of the globe for some time; #weareallinthistogether now takes on a new meaning as we navigate a way out of this uncharted global supply and shipping crisis.
With more than 50 years in end-of-line packaging, there isn’t much our team hasn’t seen or experienced; if the shipping crisis has affected you, why not get in touch with one of our experts on 01 685 2096 who may be able to provide advice or a solution that helps you work though this uncertain time.