-
The Future of Transit Packaging
-
-
Simon Smith,
-
Senior Consultant Business Intelligence,
-
Pira International,
-
United Kingdom
Transit packaging takes on several crucial roles in the distribution,
storage and retailing processes, and has now come to occupy centre stage
in the packaging arena. Many products travel great distances through
demanding climatic conditions and sometimes difficult terrain to retail
points all over the globe as the length and complexity of most supply
chains have increased considerably over the last decade. Apart from
containing and protecting the product and its primary packaging, transit
packaging now facilitates safe handling of products, and also plays a
key role in merchandising. Transit packaging is a crucial component of
overall packaging and provides information relating to products,
prevents tampering and presents opportunities for product branding.
Globally, efforts are taking place towards material reduction in line
with sustainability agenda. The transit packaging market was valued at
$160.1 billion in 2007 and is forecast to grow at a compound annual
growth rate (CAGR) of 3.7% to reach $205.0 billion by 2013.
The transit packaging market in the Middle East and Africa was estimated
at $9.8 billion Africa in 2007 and is
expected to reach $16.2 billion by 2013. However, when compared with
other regions, it has a relatively high CAGR of 8.5%.
Transit packaging can be either single trip or returnable. While single
trip packaging is mostly used for the despatch of goods where return of
the transit package is not feasible or economically viable, returnable
transit packaging (RTP) is more cost effective in the long run. Share of
RTP is also growing, as most users have experienced cost reduction,
better product protection, enhanced sustainability and supply chain
efficiencies, and, most of all, a huge reduction in the disposal of used
packaging.
The ubiquitous corrugated box, available in various sizes, has
traditionally been the mainstay of single trip transit packaging all
over the world. Its features in terms of ease of manufacture, handling,
filling, closing and dispatch, combined with its cost economics and
recyclability have made it one of the most enduring forms of packaging.
Where a complete distribution cycle cannot be closed, there is no real
alternative to the corrugated box.
Pallets and crates used for transit packaging can be both single trip
and returnable. While wooden pallets are durable, dry and provide
complete deck coverage, plastic pallets are designed in such a way that
they are reusable for several years. By reducing costs and packaging,
these returnable pallets and crates improve efficiency and build brand
value and they are designed for many years of use.
Protective packaging
Protective packaging that helps in safe transit of packaged products is
expected to grow, driven by the expanding internet and mail order
catalogue sales, and by the specialised requirements of packaging of
products such as electronic goods and fragile objects. The global
protective packaging market was estimated at $13.0 billion in 2007 and
is forecast to reach $18.5 billion by 2013, growing at an annual rate of
5.6%. Accounting for 4.4% of the global market, the protective packaging
market of the Middle East and Africa
was valued at $577.4 million in 2007 and is forecast to reach $1 billion
by
2013, with a CAGR of 10.1%. Availability of labour at low cost and of
technical skills has helped Asia to position itself as one of the major
exporters of manufactured goods, including consumer electronics, toys
and textiles. This has resulted in large movement of goods from the East
to the West, thereby creating significant demand for transit packaging.
Recent years have seen an improvement in the methods used for moving
goods from the point of production to the point of sale. For instance,
small packs that can be easily opened and quickly converted from a
transit pack to an on-shelf display tray are now adding value for the
brand owner and the retailer. RRP is being increasingly adopted by many
retail chains and grocery stores, as this form of packaging enables the
goods to be displayed effectively on the shelves. In 2007, the RRP
market was estimated at $10.8 billion. With a CAGR of 5.8%, this market
is forecast to reach $15.3 billion by 2013.
Industry Trends
The desire to reduce one-way
packaging and the increased automation opportunities that well-designed
systems provide are two of the industry drivers that have helped the
transit packaging industry to grow rapidly in recent years.
Environmental concerns, demographic and lifestyle changes, dominance of
the retail sector and the trend towards intelligent packaging are some
of the other trends of this industry. Major drivers with an impact on
the transit packaging industry include:
Consumption trends
– Demand for unit packaging with impressive graphics is on the rise.
The design requirements for transit packaging for each of the market
segments are different and provide continuous challenges to converters.
Retail trends
– The growth of the retail sector, especially in the developing
countries, has put various brands on their toes as consumers opt for the
most appealing packs on the shelf in the outlets. This has driven many
packaging companies to come up with innovations in order to increase
their product sales from retail outlets.
Design trends
– Presentation plays a key role in retail outlets and the use of
imaginative designs enables packaging companies to complement the
primary packs and improve product recognition and purchase. Returnable
crates for fresh produce are also considered an improvement over
corrugated alternatives and have gained immense popularity among many
retailers.
Security trends
– Brand owners are relying on brand protection and
anti-counterfeiting measures to help safeguard packages in transit.
Barcodes and radio frequency identification (RFID) on the transit
packaging are the major business initiatives to track and trace products
and prevent counterfeiting.
Technology trends
– The accelerated demand from the consumer markets for value added
packaging is driving the technological developments. In case of
corrugated boxes, the usage of lightweight liners and flutings are some
of the more interesting technological developments over recent years. In
the pallet/crates pooling system the usage of RFID for tracking and
tracing is growing in a large manner. Further material reduction in the
construction of pallets and crates has helped in reduction of costs.
The demand for foldable
crates is also increasing.
Environmental trends
– Increasing environmental awareness has resulted in consumers
demanding greener products and packaging that is sustainable. This has
translated to retailers becoming more adaptive to the environment and in
turn pressurising brand owners to meet consumers’ demands. Retailers
have started to source their products from suppliers with green
practices. For instance, in 2007 Wal-Mart set a goal to reduce packaging
across its supply chain by 5% by 2013. Further packaging reduction and
sustainability initiatives help the transit packaging industry to seek
further savings and material reduction. However, these efforts need to
be balanced against increasing damage and material costs through
wastage.
This article is based on research completed for a Pira International
market study The Future of Transit Packaging. The study is available for
£3,500. For more information, please contact Stephen Hill on +44 (0)
1372 802 025, stephen.hill@pira-international.com
Based on primary research and expert analysis, The Future of Transit
Packaging provides quantitative market sizes and forecasts by packaging
type, end-use and country globally.
Pira International
Pira International – the worldwide authority on packaging, paper and
print industry supply chains
Established in 1930, Pira provides strategic and technical consulting,
testing, intelligence and events to help clients gain market insights,
identify opportunities, evaluate product performance and manage
compliance
www.pira-international.com