Empack 2022: Ukraine war overshadows pack innovation as producers feel supply chain pressure
06 Apr 2022 --- Packaging businesses are feeling the heat of the Ukraine war as raw material sourcing becomes increasingly difficult and energy costs continue to rise. PackagingInsights found at the ongoing Empack trade show in Gorinchem, Netherlands, that many companies cannot guarantee product prices for their customers before making orders and say they must bear the brunt of supply chain pressures without any serious help from governments.
These disruptions are preventing some companies from creating new product innovations catering to changing market demands and increasing concern over environmental sustainability.
During the show, an expert, who did not want their company to be named, says the EU is failing to aid European industry sufficiently while Chinese businesses continue to take advantage of the ongoing crises swamping markets – particularly in the paper industry.
Machine manufacturer Syntegon also expressed concern over the boom in stainless steel pricing, while cardboard specialist Rajapack commented on how these challenges – despite being highly disruptive – are making trade more exciting and rewarding when success is achieved.
Metallic struggles
Machine producers in the EU face significant problems as the raw materials needed for production are booming in price, along with soaring energy costs in the assembly process.
Erik Schipper, area sales manager for Syntegon, says this is hindering industry efforts to provide more efficient and environmentally sustainable machines for manufacturers.
Syntegon is facing rising raw material prices for its machinery but says the impact is relatively minor for the company overall.Syntegon’s SVE 3220 DZ vertical bagger and Elematic 2001 WAH case packer, which were newly presented last year, offer the possibility for companies to package products in plastic or paper-based materials through the same machine. These designs were made to cater to the growing industry shift toward fiber packaging as tighter legislation restricts the use of plastic.
“We are seeing in certain areas that it is moving more and more from plastic to paper. This [trend] is driven on one side by the customers and on the otherside by the factories themselves,” says Schipper.
“With the challenges we now have in Europe concerning the Russian area, it’s also simply a matter of trying to be ahead of our competition. We have a lot of customers in both Ukraine and Russia, and we are losing orders on one side and on the other side, we have the problem that the machines are ready, but it isn’t possible to ship them out.”
As a whole, the Ukraine crisis is a minor issue for Syntegon, says Schipper, but it “is indeed affecting us.”
Steel and plastic
Schipper continues that Syntegon is waiting and planning for any solutions it can achieve with its customers given the current crisis and working toward making new arrangements for product delivery.
However, the rise in prices of raw materials like steel, which makes up a significant proportion of machine parts, is another challenge companies like Syntegon must face.
Last year, the US and EU ended a Trump-era trade war over materials like steel and aluminum to combat China’s global monopoly on commodities and empower Western industry to revert to more environmentally sustainable production practices at fair prices. However, the outbreak of war in Ukraine, coupled with soaring inflation, has damaged these intentions.
Moreover, the plastics industry – already under strain in the EU due to conflicts over rising prices in the past year – is now seeing compounded threats by rising oil and gas prices.
“When you look at our machinery, there is a lot of stainless steel as well as steel and plastics used, so indeed we face a great increase in price. It is always close to our suppliers to understand when to increase the prices and in what time frame, so that we can communicate that to our customers,” continues Schipper.
Rajapack uses locally sourced fiber to reduce reliance on wood from Eastern Europe, helping lower costs and cutting down on carbon emissions.
Paper crisis
One of the industry areas most impacted by the Ukraine war has been the paper market, which has seen massive volatility in supply and cost. Much of Europe’s pulp and paper is traditionally sourced from Russian forests. Still, the Kremlin’s decision to invade Ukraine has driven many industry players to suspend all business in the country voluntarily.
A spokesperson at Empack, who wished to remain anonymous, says their company is now faced with ordering supplies months in advance with no knowledge of how much it will cost for their customers.
“We cannot even tell our customers how much we will have to charge or even plan how much to order,” they say. A lack of action by the EU is to blame, they assert, as the market is now open to exploitation by countries like China, who can dump cheap material in Europe and drive local businesses under further pressure.
Matthijs Stuurman, sales manager for Rajapack, a UK-based cardboard packaging specialist, adds, “at the moment, there are a lot of challenges as raw materials are scarcer, but demand is increasing. Current affairs issues like the Ukraine crisis means there is less paper, but with e-commerce booming, demand is everywhere.”
Rajapack is turning to local sourcing for its materials, for example, in Belgium, which helps lower costs and also reduces the consumption of environmentally damaging energy used in transportation.
“These challenges also make it more interesting, more rewarding and a bit more fun when we do manage to help our clients in a good way.”
, reporting from Empack 2022, Netherlands
By Louis Gore-Langton
