Noticed your packaging costs creeping up recently? You’re not imagining it. Across the UK, organisations are experiencing the Great April Price Increase. This phenomenon is affecting industries nationwide, and packaging is no exception.
The Great April Price Increase
Costs typically go up at the start of the financial year. This April saw increases in employer National Insurance Contributions (from 13.8% to 15%), wages (National Living Wage +6.7%), and phone, broadband, and utility prices. Added to this, Plastic Packaging Tax rose from £217.85 to £223.69 per tonne, and the spectre of Extended Producer Responsibility for packaging loomed ever closer, with EPR payments due for the first time in October.
The cost of doing business is climbing. According to ONS data, inflation (CPI) sits at 3.5%, and companies are reacting: the number of businesses planning to increase prices doubled between December and February.
Rising packaging industry costs
The raw materials for paper packaging have become significantly more expensive. UK paper production covers less than a third of domestic demand. This means the country is heavily reliant on imports. At Actionpoint, our paper supply comes primarily from Europe, where production costs are high. Energy prices in the EU remain twice as high as pre-Covid levels, and mill closures (sometimes strategic, sometimes essential) have restricted supply. Because paper is energy-intensive to produce, these pressures feed directly into pricing. The industry has already seen one round of increases this year, with more forecasted for July.
But here’s the good news
We’ve been through this before. Packaging tends to run in cycles, with a few years of stability followed by a year of increases. The last particularly tough year was in 2022. This may turn out to be another short-term peak before a return to calmer waters.
Better still, there’s promising change on the horizon. Eren Holding is redeveloping Shotton Paper Mill in North Wales to create a world class facility. Due for completion by the end of the year, the mill is expected to substantially boost domestic paper supply. This will likely reduce prices and give businesses more control over their sourcing.
What’s happening at Actionpoint?
Like our customers, we are not immune to rising prices. But that doesn’t mean just passing increased costs down the line. We continually look for ways to improve our operation and mitigate expense. Most recent changes include:
- More efficient internal systems that increase capacity without extra cost.
- Switching certain products to performance grades that offer better value.
- Introducing new vehicle routing software to cut delivery times and fuel use.
- Investing in energy-efficient lighting in the Packaging Creation Lounge.
- Expanding our stock product range such as tapes, voidfill, and pallet wraps, to help customers make savings on essentials beyond corrugated packaging.
Despite our efforts, we can’t eliminate or absorb all of the cost increase. There will be an increase in packaging prices. However, some products will remain the same or even decrease. Be wary of suppliers that raise prices across the entire range. There should always be some opportunities to reduce your spend, and we’ll help you to find them.
How much more will I have to pay?
Each product category is different, so we can’t put an exact figure on it in this blog. For individual feedback, please get in touch with your Account Manager. They will be happy to help. To give you an idea, the amount should be similar to your increase in the last round of price rises.
What about lead times?
Every time prices go up, companies bring their packaging orders forward. We’ve already seen an increase in lead times of 1-2 weeks. This is likely a short-term trend that should settle by August – but it’s something to bear in mind. Especially if you need more packaging within the next month or two.
How can Actionpoint help?
Some businesses are feeling the squeeze of rising costs. Others are concerned about operational inefficiencies. Whatever their circumstances, we have found 3 main ways to help customers navigate the Great April Price Increase:
- Insight Audit: a complete review of your packaging and processes to drive productivity and cut waste.
- Packaging Focus: if your ops are highly optimised, we concentrate on improving your packaging design and materials.
- Operations Focus: if your packaging is top notch, we help to streamline your processes instead.
Get in touch
Cost increases aren’t just affecting Actionpoint, they’re industry wide. But with 50 years of experience behind us, we see the opportunities in the challenges. Contact us today and discover how to consolidate your packaging, reduce costs, and strengthen your business. Let’s get through this together.
