The ITB Insider

The Midwest Packaging Market

The Midwest packaging market presents a mixed picture, with growth in some sectors offset by declines in others.

Packaged Food and E-commerce Drive Growth: Packaged food and e-commerce businesses are currently experiencing an increase in packaging sales, indicating strong consumer demand in these areas. This trend aligns with the national surge in online shopping and the ongoing need for convenient food options.

Automotive Packaging Struggles: The automotive industry, a significant driver of packaging demand in the Midwest, is facing headwinds. Currently, automotive packaging sales have dipped due to the industry’s slowdown. A general manager of a Midwest box plant reported year-to-date sales down from last year, reflecting this trend (source: Green Markets Box Report ).

E-commerce Optimism with a Cautious Eye: While e-commerce has seen a rebound after a sluggish summer, optimism for the holiday season remains guarded. Uncertainty surrounding the upcoming election and potential policy changes is leading to cautious optimism among e-commerce businesses.

Box Lead Times: Box lead times in the Midwest remain stable, with most companies offering deliveries within 2-3 weeks.

Overall: The Midwest packaging market reflects a period of transition. While packaged food and e-commerce offer growth opportunities, the automotive industry’s slowdown presents challenges. The upcoming holiday season will be a key indicator of consumer confidence and overall packaging demand in the region.

Automotive Industry Embraces Nearshoring as Supply Chains Transform

A recent report by Capgemini Research Institute reveals a significant shift in the automotive industry’s approach to supply chain management. As companies navigate disruptions caused by factors like electric vehicle production, new regulations, and software integration, they are increasingly turning to nearshoring strategies.

The report highlights a 22% decline in offshore procurement over the past two years, with expectations for a further 19% decrease by 2025. This trend is fueled by a desire for greater supply chain resilience and regional diversification.

Mexico, with its strong manufacturing base, free trade agreements, and proximity to the U.S, emerges as a key player in this nearshoring trend. Major corporations like Tesla and Nissan have already established operations there, and the data suggests this trend is only accelerating.

As more manufacturing operations are relocated closer to North America, there will be a corresponding increase in demand for packaging materials and solutions to support these operations. This could lead to growth opportunities for packaging suppliers and manufacturers in the region.

Packaging Consolidation: Veritiv Acquires Orora 

Photo retrieved from Veritiv Corp.  

In a move to solidify its position as a leader in North American specialty packaging distribution, Veritiv announced a binding agreement to acquire Orora Packaging Solutions (OPS), the North American packaging and distribution business of Orora Limited. This strategic acquisition, valued at $1.2 billion, is expected to close in the fourth quarter of 2024.

“The combination of Veritiv and Orora Packaging Solutions will significantly enhance the value we deliver to our customers,” said Sal Abbate, Chief Executive Officer of Veritiv. Both companies boast complementary business models and a strong commitment to sustainability, which will be maintained going forward.

OPS, with $3.3 billion in annual revenue and a focus on custom solutions, will allow Veritiv to expand its reach and capabilities.  Veritiv highlights the combined company’s “broad-based footprint, enhanced design and value-added services, and a laser focus on sustainability” as key benefits for its customers.

For Orora, the divestiture allows them to become a dedicated beverage packaging business. They plan to invest the proceeds from the sale in beverage packaging production and debt reduction.

Collapsible Centerspilt Bulk Bin Returnable Divider

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