Flexible Packaging Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.

The geographical location, scale of business, transportation, type of business, order volumes and density, and complexity play a vital factor in analyzing the rate benchmarking of the flexible packaging category. A significant aspect of logistics is transportation. Freight can account for up to 10% to 20% of a company’s retail pricing and 50% of its logistical costs. As of June 2023, the ocean rates for North America from China were on the rise as supply and demand were better balanced. From May 2023, the freight prices from China ports to Western U.S. ports jumped by 19.2%. During the same period, ocean rates to the eastern U.S. ports increased by 11%.

At the end of June 2023, a few examples of ocean freight rates for the transportation of 20-foot FCL containers from China to the North American region were as follows - Shanghai to Los Angeles rates started from USD 1,300, Qingdao to New York rates started from USD 2,100, Yantian to Baltimore rates started from USD 1,900 and Shanghai to Savannah rates started from USD 2,000. In comparison to May 2023, the freight prices for shipping goods from Chinese ports to European base ports had reduced by 1.5% with the availability of sufficient space and equipment.

Similarly, the density also plays a key role in pricing. Compared to flexible packaging, denser and thicker materials are frequently used to create rigid packaging. This in turn increases the prices as transporting low-density goods typically costs more per pound.

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Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, packaging engineers at Amcor, Constantia Flexibles, and Huhtamaki receive a 15% - 20% higher base salary compared to the salary received by packaging engineers working in companies such as Sealed Air Corporation and Ampac Holdings. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to continuously track all the latest developments in their supplier landscape. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the flexible packaging category over the last two years:

• In August 2023, Amcor announced the acquisition of Phoenix Flexibles to expand the company’s capacity in India for its flexibles division. Amcor will be able to meet the continued high demand with Phoenix Flexibles' capitalized and strategically placed production facility in Gujarat, India. Adding advanced film technology to Amcor's product offering will enable local production of more sustainable packaging solutions.

• In July 2023, Huhtamaki announced a sizeable investment in its Paris, Texas plant in the U.S. The deal entailed consolidating an external warehouse in addition to increasing its manufacturing capability. The manufacturing and warehouse facilities will be leased, and an estimated USD 30 million will be invested in production assets. In order to support the expansion of the food service industry, the deal aimed to enhance the North American business segment's capacity for folding cartons.

• In April 2023, A non-binding letter of intent was signed by Sealed Air and Koenig & Bauer to further advance their strategic alliance for digital printing machines. The alliance aimed to improve packaging design capabilities by creating cutting-edge digital printing technology, tools, and services. The trademarked “prismiq” technology, software, and intellectual property from SEE will be used in the Koenig & Bauer RotaJET-series of digital printing machines.

• In February 2023, one of the leading manufacturers of customized flexible packaging, PPC Flexible Packaging acquired StePac, MAPfresh Holdings. For bulk and retail applications, StePac provides atmosphere- and humidity-controlled packaging using roll products, lidding, and pre-made bags and pouches. The acquisition aimed to strengthen their integrated sustainable packaging for specialty fresh-produced products.