Why has the cost of plastic containers increased?

Brexit

We knew Brexit was coming, and would try to get ready for any impact it may have. We were relieved when the duty announced was zero, but as the final details were not sorted until a few hours before the deadline, it did create a bit of a problem for the transport companies. Brexit brought big challenges for goods being imported into the UK and the cost to import the goods started to rise. Shortages of drivers meant an increase in wages to attract new drivers and to retain existing ones. There were also long waiting times at borders due to the introduction of new customs paperwork which all impacted on the cost of freight.

Covid-19

No-one could foresee Covid-19. The global pandemic hit supply chains really hard. The availability of the raw materials to produce plastic reduced dramatically and this reduced availability meant that prices increased. Numerous suppliers of raw materials declared ‘Force Majeure’ and even cancelled orders leading to deviations to agreed delivery times and delivery quantities. Production slowed due to reduced availability and reduced staff. All of this had a huge effect on costs resulting in an industry wide price rise. Plastic is also in packing materials such as tape and pallet wrap which were also effected. Cardboard manufacturers had difficulty getting the materials to produce boxes. People were ordering online for goods to be delivered to home due to lockdown, which meant an increase in demand for packaging, add this to a shortage of staff lead to another price increase.

Bad Weather

Plastic is a derivative of crude oil. A particularly cold winter in Texas in 2021, caused large disruption to the oil supply. Oil refiners were forced to shut down production due to electricity blackouts caused by the freezing temperatures. The disruption increased the ongoing plastic shortage.

Energy Price

At present, the supply of the raw material has returned to pre-Covid levels and we are hopeful it will stay this way. However, we are now being faced with a sharp increase in energy costs and the cost price of the raw material to produce polypropylene has also risen. The conflict in Ukraine and the reliance on Russian energy has caused huge price increases in the energy market. Energy surcharges and cost price increases are being passed onto us from our European suppliers, and these are consistently changing.

Plastic Packaging Tax

We are also now faced with PPT. The timing isn’t great, but it has been on the governments green agenda for a few years now. PPT is based on weight of plastic packaging with less than 30% recycled materials – which is all food safe polypropylene containers. You can read more about it on our blog.  It will result in prices going up for our customers as it is a tax that we have to pay as the importer of the plastic packaging, however, it is a very small increase per pot or bucket.