Market Update: Look ahead to 2022

Market Update: Look ahead to 2022

Since March 2020, the landscape for the packaging market has been up and down to say the least. If you are a regular reader of our market updates, you will be more than aware about all the issues that have been faced – from containers, to drivers, to shipping and even CO2 – there’s certainly been a fair share of challenges.

So as we reach the end of 2021, what will the first few months of 2022 bring us? Here, we take a look at a number of areas that we think will be impacting the packaging market as we move into the new year.

Chinese New Year
February is braced to be a busy month for China with both the Winter Olympics and holiday season.  In 2022, Lunar New Year takes place at the beginning of February (starting on Tuesday 1st) which means that with businesses closing for weeks, this will undoubtedly have an impact on productivity and shipping.

Containers & port congestion
We have written plenty about port congestion in our previous updates, especially in the run up to Christmas, with some ports turning ships away and rerouting them. Although the Christmas demand will be out the way, it is unlikely that ports will catch up anytime soon, and therefore delays are still to be expected past Q1 2022. There are many factors combined with the container issues here in the UK (such as the driver shortage) so we think this will take some time to sort itself out – probably past Q1.

Logistical challenges still remain around containers, and therefore prices are expected to remain high. However, with the new year holidays in China for a number of weeks, it may offer a period of much needed breathing space for shipping and logistics.

Paper prices
By now, we are sure that you will have experienced increases from your packaging supplier(s) when it comes to cardboard and paper prices. Prices have risen throughout the course of 2021 – with so many factors impacting prices, suppliers have had to pass on the additional costs rather than simply continue to absorb them. High demand and rising energy costs are two such factors that have played a part in the price hike. That, along with the obvious impact of the pandemic and staff shortages means that prices in 2022 are likely to remain high, and possibly go higher.

Plastic Packaging Tax
Anyone involved with plastic packaging will be patiently waiting for the final legislation to be released. The tax comes into effect on 1st April, meaning that all manufacturers and importers that are in scope of liability will have Q1 2022 to prepare their businesses accordingly. We have recently run a webinar on the tax, so if you missed it, then please contact us to request the recording. The tax will have a big impact on the packaging market – with growing demand for >30% recycled plastic packaging products, yet with supply potentially not at a level to meet the demand. Watch this space…

UK border changesFollowing Brexit, a big change is coming into effect as of 1st January 2022. Goods that are imported into the UK, from the EU, will now need to provide a full customs declaration from the new year. This means that now, documents and tariffs will need to be dealt with upfront – a change from the current rules. If you import from the EU, then you need to be aware of the changes that will be taking effect.