Packaging and Medical
All Signs Positive for Packaging in 2016
Packaging is not an end product in and of itself. So, like a number of other industries, you cannot just grab industrial production data for packaging to see how the industry is performing. However, there are two major industries that drive packaging demand: food and industrial (primarily shipping materials). So by tracking what is happening with the food and beverage, clothing and footwear, and trucking industries, we can get a feel for what is happening in the packaging industry.
Food and beverage spending was virtually flat for most of 2015, but with the strong growth in income, food and beverage spending should see accelerating growth in 2016. In turn, food and beverage spending leads food and beverage production, which is already growing at nearly its fastest rate in eight years. Food packaging seems poised for significant growth in 2016.
Primarily, institutional packaging consists of stretch film, and sheet and tubing, but consumer and industrial product liners and shrink film also are a significant part of institutional packaging. The Bureau of Transportation Services’ freight index is virtually at its all-time high, nearly 20 percent higher than in 2000 and roughly 10 percent higher than in 2007. However, despite this all-time high, the rate of growth was relatively flat in 2014 and even decelerated somewhat in 2015. The growth rate is still strong enough that this is a positive for packaging demand, but the fact that the growth rate is decelerating indicates that institutional packaging is probably a weaker market than food packaging going forward.