The ITB Insider: Unboxing the Latest News

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      The ITB Insider

      Unboxing the Latest News

      June 2024

      Industry Updates

      The packaging sector is experiencing a dynamic period marked by both innovation and significant transformation. This month’s update explores key trends that will undoubtedly influence the future of the industry. We’ll delve into the strategies of major e-commerce players driving sustainability, as well as the impact of mega-mergers reshaping the competitive landscape.

      Amazon Cuts Plastic With Paper Filler Switch

      The e-commerce leader, Amazon, is making significant strides towards sustainable packaging. They’ve replaced nearly 95% of plastic air pillows in North American deliveries with paper-based alternatives, aiming for complete removal by year-end. This shift is projected to eliminate an estimated 15 billion plastic pillows annually, significantly reducing waste.

      “We are working towards full removal in North America by year-end and will continue to innovate, test, and scale in order to prioritize curbside recyclable materials,” stated Pat Lindner, VP of Mechatronics and Sustainable Packaging, in Amazon’s announcement.

      This move follows the success story of a pilot program at an Ohio Amazon fulfillment center last October, where plastic packaging was entirely eliminated. Building on this success, Amazon is implementing the paper filler solution on a large scale. They are collaborating with suppliers to ensure this paper filler is made from 100% recycled content, and the good news for consumers is that it’s also curbside recyclable.

      Expect to see the change reflected in your upcoming Prime Day packages – most will arrive free of plastic air pillows. This initiative highlights Amazon’s commitment to a sustainable future and builds upon their previous efforts. In 2015, the company launched the Ships in Product Packaging program, an initiative designed to reduce the use of Amazon’s signature brown box. This program allows for qualified products to ship in their original packaging, further minimizing overall packaging waste.

       Amazon’s paper filler shift solidifies their role as a leader in sustainable e-commerce packaging. This initiative sets a strong example for the industry, promoting innovation and environmental responsibility.

      WestRock & Smurfit kappa Merger

      The paper and packaging industry is on the verge of a major transformation with the upcoming merger of WestRock and Smurfit Kappa. This $20 billion deal, expected to close on July 5th, will create a giant in the sector, named Smurfit WestRock. This new entity will be the world’s largest paper and packaging group, creating an unmatched global footprint spanning 42 countries.

      The merger promises significant benefits for both companies and the industry as a whole. Smurfit WestRock will leverage its vast network of over 500 converting operations and 67 mills to achieve significant operational efficiencies. These combined resources are projected to deliver annual cost synergies exceeding $400 million within the first year of operation.

      This merger also signifies a positive shift in the industry’s outlook compared to last September when the deal was first announced. While the pandemic-driven demand surge has subsided, the long-term prospects for the paper and packaging industry appear brighter.

      The overwhelming shareholder approval for the merger underscores its potential. Nearly 99% of Smurfit Kappa shareholders voted in favor of the deal. Under the terms of the agreement, WestRock shareholders will receive one share of Smurfit WestRock and $5 in cash for each WestRock share they own. While the merger’s completion is subject to certain conditions, it appears to be on track for a July 5th closing.

      It’s important to note that WestRock’s CEO , David Sewell, and CFO, Alexander Pease will step down after the merger goes through, with a combined “golden parachute” severance package of $45 million. This landmark deal signifies a consolidation within the paper and packaging industry. Smurfit WestRock is poised to become a dominant player, offering a wider product range and potentially impacting market dynamics in the coming months.

      Consolidation Reshapes The Packaging Landscape

      The packaging sector is witnessing a significant wave of consolidation, with major players strategically merging and acquiring assets to strengthen their market positions. This trend is particularly evident in the North American containerboard market, where giants like WestRock, Packaging Corporation of America (PCA), and International Paper (IP) collectively control nearly 60% of the market share.

      The corrugated packaging industry in the US, valued at a substantial $43 billion, is widely recognized as a bellwether of the overall economy. Recent merger activity, such as the proposed acquisition of WestRock by Smurfit Kappa, would create a combined entity – Smurfit WestRock – alongside IP, wielding significant influence in both the Americas and Europe.

      Furthermore, the expiration of the waiting period under the US’ Hart-Scott-Rodino (HSR) Act for the proposed merger between DS Smith and IP signifies another major move in this consolidation trend. This deal appears largely driven by DS Smith’s desire to expand its footprint in the US market, which boasts a more promising growth trajectory compared to other regions.

      These developments point towards a more concentrated packaging landscape, with potential implications for pricing, innovation, and customer service. ITB Packaging will continue to monitor these trends closely and provide further insights in future editions of this newsletter.

      Design of The Month

      ITB Packaging cold chain inserts feature a strategically placed central cell specifically designed to accommodate ice packs or dry ice. This configuration ensures uniform temperature distribution, safeguarding the integrity of your temperature-sensitive products, particularly meats and refrigerated items, throughout transit.

      Beyond temperature control, ITB’s cold chain inserts prioritize a premium customer experience.  The inserts promote organized product presentation within the packaging, fostering a positive unboxing experience for your valued clients.

      ITB offers purchasing flexibility. You can purchase these inserts individually or opt for a comprehensive cold chain packaging solution.

       

      Stay Tuned!

      Next month, ITB Packaging’s CEO, Jeff Tischleder, will be featured on the Re-Packaging Revolution Podcast, hosted by David Marinac.

      Stay tuned for the release date! You won’t want to miss this in-depth conversation that delves into the evolving world of packaging and the strategies driving our success.

      Keep an eye on your inbox for more details, and get ready to join us for an enlightening discussion!

      Re-Packaging Revolution

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