By: Beroe Inc --
17 May, 2020
Key Highlights:
Demand for packaging products across categories is expected to decrease by 10-20% across categories owing to the impact of COVID-19. Supply tightness is expected to increase in 3-4 months with depletion of suppliers' inventory across the globe.
Major suppliers are shifting their non-essential packaging capacities to essential packaging, inorder to cater to the increased demand in food and healthcare sectors. Apart from these, standard packaging products are making a comeback to the market to ease the supply chain.
Demand for essential services such as personal and healthcare products is witnessing a spike which can impact both rigid and flexible packaging products, especially HDPE containers, pumps and pharmaceutical bottles, however, demand from packaging of non-essential industries is declining gradually with many countries under lockdown and restricted movement across countries .
Regional label suppliers who do not cater to food and healthcare industries can witness reduced demand owing to shutdowns all over the globe. However, key global players such as Avery Dennison and CCL Labels continue their business operations with focus on essential business such as healthcare and food with priority.
Impact of COVID-19 on China is slightly improving with manufacturing units resuming to function, however majority of the countries such as US, UK, Italy, India etc. are in complete lockdown, indicating a dip in overall demand. Restriction of movement across countries curbs opportunities for cross country sourcing.
Industry Risk Drivers |
Comments |
Risk Probability
|
||
Almost Certain |
Likely |
Possible |
||
Logistics/Movement of goods |
Restriction in transportation services and labor |
|||
Dip in Food and Beverages demand |
Seasonal demand reduced with countries under lockdown and restriction in public gatherings |
|||
Challenges with Partially Operational Companies |
Suppliers cater to essential end use industries such as healthcare on a priority basis, indicating potential supply disruptions for other industries |
|||
Cost of the Packaging Products |
Cost of the products are expected to gradually increase owing to supply shortages in the next 2-3 months |
Key Facts
HLP Klearfold, clear box supplier in the US has planned to manufacture around 600,000 face shields per day with the existing resources of plastic packaging
Thermo fisher is working closely with the Indian government to ramp up rapid testing phase within the country with supply of kits
Amcor is focused on R&D support for developing convenient packaging for perishable essentials to support healthcare demand
Market Outlook
Food and Beverage
Personal Care
Demand from personal care industry is limited with restriction of movement across the globe, and buyers who operate largely in personal care segment are adhering to the lockdown and have operating percentages below 10% which can cater to categories such as hand sanitizers, personal protection equipment etc.
Suppliers cater to essential services on a priority basis which can create supply disruption in the next 3-4 months for personal care
Pharmaceuticals
Standard products such as antibiotics, general immunity boosting medicines are still at a higher demand as compared to other pharmaceutical applications, however owing to challenges in logistics, there is a wide supply demand gap
Packaging suppliers catering to pharmaceutical industry have them on a priority basis, thus are meeting the soaring demand through inventory and low operational services, however, the supply constraints are expected with prolonged lockdowns
Mitigation Measures
Companies should create a pandemic reaction plan. Firstly, establish a working group of employees from across the organization to author the plan
Owners and contractors should work together to implement public health and infection control improvements on the jobsite by providing masks, sanitizers
Most contractors should claim postponement of time of the completion date of the project as a result of interruption caused by the novel coronavirus. (Force Majeure or NEC3)
Companies with extensive international supply chains should contemplate the tax and transfer-pricing components of restructuring their supply chains by identifying alternate suppliers. To help evaluate labor costs, consider workforce emergency planning scenarios, including during a period of diminished demand and activity.
Key Facts:
Avery Dennison has dedicated a part of its operations to manufacture 500,000 face shields for distribution across hospitals
Berry Global in the US has maximized its production capacity toward providing medical and healthcare supplies with being a leader in non-woven fabrics
Sonoco uses alternative sourcing for raw materials and has restricted imports from China to a very minimal
B
Best Packaging Company in India
Nice Blog . Thanks for the relevant information
reply
COVID-19: Assess impact on your suppliers and ensure business continuity with Beroe’s WIRE
(World Instant Risk Exposure)