October market update

Christmas is now 60 days away, and after a turbulent year across global supply chains, the outlook for the remainder of the year continues to throw up problems. Below we set out a few areas that are causing issues across our supply chains, with the impact on packaging a key focus.

Packaging prices
Not only have raw materials seen price rises over the course of the pandemic, but productivity due to factors such as staff shortages, have meant that the supply and cost of goods has been impacted. The latest issue to affect the price of packaging goods is energy prices. With the cost of gas and electricity soaring, the price of both paper and plastic packaging is inevitably rising. Manufacturers, who have previously been absorbing price increases, can no longer do so and as such will have to pass the costs over the consumer.

UK Ports
With an estimated 12.5% of global shipping containers out of service, the impact on global shipping has been a turbulent one in 2021. Ports in the UK have started to feel the impact of congestion in the run up to Christmas with a jam of containers, impounded by the shortage of drivers too. Containers are spending days longer than usual waiting for collection which is causing a backlog of ships into ports. Felixstowe in particular has witnessed problems already and is looking at the prospect of turning ships away to ease the backlog.

Driver shortage – Europe
The problem of driver shortages is not just a UK problem, with the issue now affecting much of Europe. With an estimated 400,000 drivers required to plug the gap across Europe, the countries seeing the biggest impact are the UK, Germany and Poland. The crisis, is already having an impact on goods and fuel, but with the impact hitting container ports too, the busiest period of the year in the run up to Christmas may throw some further issues before year end.

China power outages
Power outages are being witnessed as the result of multiple factors around the supply and production of electricity in the country. With the cost of raw materials increased, the impact has been felt in China – with the majority of its energy produced from coal. With the world recovering from the pandemic, the demand for goods has increased – and so to has the demand for electricity to produce those goods. With CO2 targets imposed by the Chinese government, and electricity prices controlled by the government also, coal fired energy plants are reducing their output. The situation is having an impact on productivity, and as such will have an impact on consumer goods.

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