Increase in manufacturing output and electronic shopping to lead growth of protective packaging

As per Freedonia, global demand for protective packaging will grow by 7.8% pa through 2014 to US$22.2 bln in 2014. Advances will be stimulated by an upswing in manufacturing activity and the continued proliferation of Internet shopping in both developed and developing regions. These factors will necessitate heightened requirements for cost effective packaging used in the protection of goods from shock, vibration, abrasion and other damaging effects of shipping and handling. While the US is by far the world�s largest user of protective packaging, the most rapid increases will occur in developing regions. The Asia/Pacific region, Central and South America, and the Africa/Middle east region will all outpace the global average. Population growth, greater urbanization, industrialization trends and increases in international trade activity will support advances in these regions� generally underdeveloped packaging sectors. Rising consumer income levels and expanding middle classes will also generate robust internal demand for packaged consumer goods, boosting protective packaging requirements. Some of the best growth opportunities will occur in Asia, which is expected to see double-digit annual growth through the forecast period. In particular, China alone is expected to account for 25% of global value gains in protective packaging demand between 2009 and 2014. Overall, foamed plastic protective packaging will remain the largest product type by a wide margin. Demand will be aided by foamed plastic�s light weight and excellent cushioning capabilities compared to paperboard and other materials. However, the growing emphasis on packaging sustainability - especially in developed countries with more established environmental regulations - will constrain opportunities for conventional foamed plastic protective packaging to some extent. Protective mailers and other protective packaging products such as air pillows and bubble packaging will continue to experience the fastest gains. Among factors driving growth will be performance and environmental advantages, as well as a continued robust outlook for electronic commerce, which will fuel the need for packaging products offering enhanced resistance to impact, abrasion and temperature changes during movement of goods through the supply chain.

Demand for protective packaging in India totaled US$235 mln in 2009, accounting for 5% of the regional market, as per Freedonia. The country represents a relatively underdeveloped packaging market, largely due to its mostly rural population where per capita spending on packaged goods is minimal. Furthermore, the use of cheap and/or reusable packaging alternatives, such as newspaper, jute bags and wood crates, in lieu of more expensive protective packaging will also limit demand. Nonetheless, while the usage intensity of protective packaging in India is among the lowest in the world, demand is experiencing fast growth. Demand will continue to be fueled by rapid development in the country�s manufacturing sector. Gains will also be propelled by the expansion of India�s urban middle classes, the primary consumers of packaged products. In addition, strong growth in the number of retail stores as well as the number of online shoppers will continue to boost demand for protective packaging. Through 2014, protective packaging demand in India is projected to increase at a robust 13.6% pa to US$445 mln. This represents one of the most rapid growth rates in the world over the forecast period - albeit from a relatively small base (especially compared to the US or China). Strong economic expansion, increases in manufacturing activity, growth in living standards, rising domestic consumption of packaged goods and urbanization trends will all support gains. Interest in higher-quality, more aesthetically pleasing and environmentally friendly packaging will also fuel growth as the role of marketing takes on greater importance. Greater investment in state-of-the-art manufacturing equipment will improve product quality, further bolstering protective packaging sales

Protective packaging demand in the US is projected to increase 5% pa to US$5.9 bln in 2016. The increasing popularity of Internet shopping will benefit protective mailers, air pillows and bubble packaging. A recovery in manufacturing will spur gains for foam and molded pulp protective packaging. As per Freedonia, demand will accelerate from the pace of the 2006-2011 period based on increased manufacturing output following the 2007-2009 recession and continued solid growth for electronic shopping. These factors will necessitate heightened requirements for cost effective packaging used in the protection of goods ffrom various damaging effects of shipping and handling. Above-average growth is expected for most foamed plastics, as well as insulated shipping containers and air pillows. In addition to benefiting from a recovery in the manufacturing sector, gains for molded and other foamed plastics will be aided by advantages of light weight and excellent cushioning capabilities compared to paperboard and other materials. Further advantages of foamed plastic products include the ability to be custom molded to conform to shapes of sensitive equipment such as computers, consumer electronics and instrumentation, thereby providing enhanced protective capabilities. However, longer-term prospects will be constrained by the outsourcing of manufacturing operations to offshore locales with lower labor costs and competition from greener alternatives. Insulated shipping container advances will be driven by expanding specialized handling requirements for temperature sensitive pharmaceuticals and increased online sales of perishable foods. Rapid growth for biotechnology drugs and vaccines, which are often temperature sensitive, will fuel sales of insulated shipping containers in order to maintain product efficacy and prevent losses of high-value drugs due to spoilage caused by temperature abuse. To prevent such losses, drug makers are placing increased pressure on logistics providers to demonstrate quality assurance measures. Healthy demand for air pillows will be based on continued solid growth in Internet shopping, advantages over other materials in terms of cost and material use, and consumer preference for the product over other materials such as loose-fill. Molded pulp protective packaging demand is also expected to increase at an above-average pace, the result of heightened interest in environmentally friendly packaging, ease of disposal and more stable pricing than the competitive petroleum-based plastics. The growing emphasis on packaging sustainability has also fueled numerous introductions of recycled content and biodegradable alternatives to conventional plastic-based protective packaging products. Nontraditional biodegradable alternatives to molded foams have been commercialized in the past few years and are poised to establish themselves as production capacity increases result in expanded availability. More moderate gains are anticipated for paperboard protectors, paper fill, dunnage bags and loose-fill, the result of mature applications and/or competition from faster growing product types. Nonetheless, prospects for paper fill and biodegradable loose-fill will be helped by growing interest in environmentally friendly packaging. In addition, an improved outlook for consumer spending will bode well for demand for paperboard edge protection products, which are used by warehouse club stores, home center stores and other retail establishments to unitize and stack pallets. However, import competition in appliances will moderate paperboard protector demand.