Costs, environmental concerns reducing volume of material used in packaging production

07/23/2010 09:59:03 AM
David Mitchell

The cost of transportation, the cost of raw materials used in packaging and concerns about sustainability have increased in recent years, and packers, manufacturers and others are doing what they can to reduce the amount of materials used in their packaging.

The result, sources said, is more product packed in fewer containers, more efficient loads and more manageable costs.

According to the Elk Grove Village, Ill.-based Corrugated Packaging Alliance, that industry has worked with its customers to reduce the amount of corrugated material per unit by more than 20% in the last 15 years.

“It’s all about the amount of fiber that’s in a box,” said Dwight Schmidt, executive director of the alliance, which has made available through its members a calculator that can determine a container’s carbon footprint.

Walt Tindell, president and chief executive officer of Calpine Containers Inc., Fresno, Calif., said the price of linerboard has increased 23% this year, resulting in higher prices for corrugated boxes.

“These increases will force us all to be increasingly creative in the reduction of fiber and more efficient designs and uses,” he said.

Marketing director Roger Pepperl said Wenatchee, Wash.-based Stemilt Growers Inc. is using kraft cardboard for 20% of its boxes. He said kraft cardboard requires 10% less energy to produce boxes and costs slightly less than bleached board.

“Kraft also uses about 10% less pulp to produce,” he said, “which is great for the environment and also gives a great marketing image on organic products.”

Pepperl said Stemilt’s new box for bagged apples uses less cardboard, yet is stronger than the container previously used. It also costs less and can hold two more 3-pound bags.

Stemilt also has reduced the use of corner boards on its pallets with Rapid Rope, a recyclable plastic that pulls pallets together more than standard stretch wrap, Pepperl said.

“Corner boards are expensive, hard to recycle, and some don’t recycle due to plastic in the composition,” said Pepperl, who added that the change has saved the company time and money.

Plastics
Plastic-based packaging prices also have also gone up, said Tindell, who noted July 9 that plastic resin costs are 25% higher than at the same time last year. Prices were even higher, he said, during the first quarter.

“This movement just makes purchasing decisions much more difficult,” he said. “In the case of plastic, many products are imported and shipping costs have also had dramatic increases. Manufacturers and distributors have reduced their margins to maintain their market share.”

Tindell’s point is illustrated by the first quarter results reported by Lake Forest, Ill.-based Pactiv Corp.

The packaging manufacturer reported April 21 that its first quarter gross margin was 27.9% compared to 35.4% in the first three months of 2009, while operating margin decreased from 18.9% to 13.1%.

Polyethylene costs were 34% higher than at the same time a year ago, while polystyrene costs were up 55%, the company reported.

As with corrugated packaging, packers and manufacturers are trying to do more with less.

Jim Scattini, director of new business development at Watsonville, Calif.-based Sambrailo Packaging, said the company’s new 6-ounce clamshell will allow shippers to stack four extra tiers per pallet, or an additional 576 clamshells per pallet.

The clamshells are made from recycled polyethylene terephthalate, or PET, and are recyclable, Scattini said.

On a similar note, Antigo, Wis.-based Volm Cos., is producing a new Ultratech mesh with less raw material than standard raschel mesh without sacrificing the strength of produce bags, said business development and marketing manager Mike Vierzba.

The change, Vierzba said, should allow the company to ship more than 500,000 additional 10-pound bags per truck to its customers.

Other options
The rising cost of plastic and corrugated material could cause some packers to look toward alternatives, such as palm fiber-based packaging.

“Our raw material is waste from an upstream industry and as such our input costs are fairly steady,” said Shannon Boase, chief executive officer of Earthcycle Packaging Ltd., Vancouver, British Columbia. “People are becoming acutely aware of the effects that disposable plastic packaging is having on the health of their communities.”

Bob Klimko, director of food, beverage and sustainability marketing for Oconomowoc, Wis.-based Orbis Corp., said reusable plastic containers can be a solution for companies trying to reduce water, waste and energy.

Tindell, whose company offers both corrugated and reusable plastic containers, said RPC availability can be limited, but companies in that industry are investing to increase the size of their pools.

Organics
Several sources noted an increase in demand for “green” packaging.

Ironically, Steve Greenfield, director of sales and marketing for NNZ Inc., Lawrenceville, Ga., said that some of that increase is coming from organic producers and the retailers that stock their products.

“Some retailers who had embraced the ‘less packaging is better’ mentality for their organics have now come around to wanting packaging due to the large loss of misrings at checkout,” said Greenfield, who added that cashiers often confuse bulk organic products with typically lower-priced conventional product.

“These retailers now want packaging for the organics and naturally turn to the earth friendly options,” he said.

Greenfield said NNZ recently worked with Lakeside Produce, Leamington, Ontario, and Origin Organic Farms Inc., Delta, British Columbia, to provide Loblaws with an earth friendly header bag for tomatoes on the vine.

Greenfield said organic sales have continued to increase despite the recession because some consumers who previously ate out frequently are now eating more meals at home more and tend to buy organic.

“As the organic sales increase,” he said, “the sales of compostable packaging increases.”

Tough choices
Ian Ferguson, vice president of Mississauga, Ontario-based Chantler Packaging Inc., said sustainability isn’t as simple as picking reusable plastic or recyclable cardboard.

“It’s not just a matter of one material over another,” he said. “It’s the total lifecycle of packaging. Companies are trying to reduce packaging and do more with less. People are becoming more aware of their choices and their impact on the environment, and they’re getting smarter about those choices.”

Tindell, however, said buyers should do their due diligence when it comes to a seller’s sustainability claims.

“One of the biggest aggravations we have is that many of the claims being made in the packaging industry are not valid or are meaningless,” he said.

“‘Green washing’ is everywhere. We are committed to confirming the claims of recyclable, biodegradable and compostable, so we are working with our manufacturers and customers to truly lower carbon footprints from raw material reduction, efficient freight, increasing recycling and finding products that are true to the cause.”



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