Covid-19 and green trend driving industry changes
It’s the year of the paper package, box and bag.
The COVID-19 pandemic and the move away from single-use plastic occurring worldwide are two international occurrences shaping up to provide lingering long-term market impacts for the pulp and paper industry.
COVID-19 has massively accelerated the growth of e-commerce according to a report by Adobe released earlier this year. Spending in May was up 77% over last year and hit $82 billion with shoppers preferring to stay at home and shop via Internet rather than visit stores during the pandemic.
“According to our data, it would’ve taken between four and six years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” Vivek Pandya, Adobe’s Digital Insights manager told Forbes.“We typically don’t expect to see surges at this level, at any time outside of the holiday season.”
And, with e-commerce comes package and box delivers ranging from buying on-line from stores, dedicated on-line shopping sites, and increased sales in some retail outlets such as grocery retailers and pharmacies. Prescient & Strategic Intelligence Private Limited (also known as P&S Intelligence) which has information on its website on the corrugated box industry estimated the world market at $180 billion in 2019 with a projected CAGR of 4.3% during the forecast period (2020-2030) with the rising demand for lightweight and convenient packaging solution across diverse industries.
“Despite the imposition of lockdowns by various governments during the COVID-19 situation, the global demand of corrugated boxes has witnessed a rise, as they are considered the backbone of the supply chain, especially in countries such as the U.S., Germany, China, and India, as stated by the Fibre Box Association in 2019,” P&S Intelligence said on its website.
Smithers, a U.S. research body that looks at industry segments - one of which is packaging - has a report looking at the impact of paper products on plastics. It notes that while the use of paper packaging has increased, newsprint production has seen a decline. “In North America alone, packaging demand increased by 8% during the month of April 2020. In contrast, several newspapers have gone out of business or have suffered financial hardship because of lack of advertising as society shut down. After the pandemic subsides, long-term demand for packaging will probably exceed historical averages by one or two percent, whereas newsprint will decline at a significantly greater rate than in the past,” it reports..
Smithers looked at change occurring because of COVID-19 and the trend away from singleuse plastic, but also change occurring from what it refers to as “disruptive technology” which impacts the conventional way of doing things.
The top 20 disruptive technologies in paper and board are covered in its report but Smithers groups them into four general categories: impact of the internet on consumer behaviour; digitization of the paper and board industry; paper and board substitution for plastic; and internal transformation of the paper and board industry. The report said that the technologies with the highest likelihood of technical success have all been installed on a commercial scale to some extent, including internet shopping, electronic media, paper machine conversions, digital inkjet printing of corrugated, bio-energy generation, and light-weighting.
Freedonia, also a US research body, has issued a report on single-use plastic bags. According to Freedonia, while single-use plastic retail bags usage will continue to decline through 2023, overall sales of retail bags in value terms will jump 4.7% per year due to a significant increase in prices. These higher costs are not popular with consumers or retailers. “The main beneficiaries of single-use bans are paper bags and higher gauge reusable plastic bags, although newer types of natural fibre bags such as those based on hemp are also seeing growth.;”