The TricorBraun Pulse – October/November 2024

A Message from our President, North America and Chief Operations Officer

Normal today, from macroeconomics to climate change, means expecting the unexpected and being prepared for it. A widening war in the Middle East, election uncertainty in the US, hurricanes in the Southeast and Gulf of Mexico, a lawsuit that could change everything, and other consequential events are reminders that business as usual is anything but.

In this issue of TricorBraun Pulse, we explore the trends shaping the current economic climate for CPG companies. Our entire TricorBraun team understands how demanding this new normal is for your business, and we are committed to helping you navigate your way forward.  Please contact us to see how we can further support you. We appreciate and value your business—and we’re here to help.

Sincerely,

economy

What if we’re so ready for a crisis that we don’t know what normal is anymore? Objectively, the US economy is the strongest in the world—followed by China, Germany, Japan, and India to round out the top 5. Kiplinger recently declared that “we expect a return to normal” over the long term, with GDP expansion in the US at around 2%. And even the so-called Sahm rule—that weaker jobs numbers signal a recession—isn’t holding true. Meanwhile, the Federal Reserve’s recent rate cut signals US inflation is down and that the Central Bank wants to ease access to money to keep the US economy humming and Americans at work.

While facts are facts, human behavior doesn’t always mimic economic forecasts. From concerns about homeownership to their household budgets, consumer anxiety about the economy has ticked back up. And they’re still worried about the price of food—even if, as NPR discovered, higher operating costs and not greedflation is to blame.

Learn More

Are Greedy Companies to Blame for Grocery Inflation? We Looked at the Data.

Fed Rate Cuts Will put Money in Pockets, but a Mood Shift May Take Time.

My Recession Rule Was Meant to Be Broken.

Should We Worry About the Slowing US Economy?

transportation 

While consumer sentiment isn’t all rosy, people are still buying—a lot. And that’s being seen in booked-up commercial air freight as retailers stock up in the run-up to the holiday season. As of mid-July, the cost of air cargo from China was up significantly since the end of 2023, driven in large part by consumer demand for cheap goods. And flights were at ~85% capacity, and this was before factoring in a seasonal surge that’s creating backlogs from much of Asia into both Europe and North America.

Short-term ocean freight rates, meanwhile, are down marginally over the last two months. One cause: softening demand for imports to North America as the traditional Christmas “peak season” was shifted ahead by several months.

Another cause: headwinds in labor relations which have put significant pressure on importers—though, fortunately, the feared October East and Gulf Coast port strike came and went quickly. The agreement, which covers pay increases for workers over the next six years, does not address other thorny issues (notably automation). All of which means that if these additional issues are not resolved by January 15, 2025, we could see another work stoppage at ports from Maine to Texas. 

While the immediate work stoppage ended quickly, the impact of the operational disruptions is likely to be felt for 4-6 weeks. In addition, many shipping containers are sitting in “wrong” ports outside the US as carriers tried to prepare for the expected ports’ shutdown. Moreover, carriers announced disruption surcharges beginning mid-October—and carriers rarely announce increases that do not, in fact, take effect.

Meanwhile, dockworkers at the Port of Montreal, who have been operating without a binding contract since January 1, walked off the job for a three-day strike October 1-3. And Canadian rail workers are currently operating under a government mandate to return to work after a one-day lockout this summer. The Teamsters have filed a legal challenge to the government’s binding arbitration order. All of which means rail freight is also flowing—for now. 

Learn More

Bottlenecks Begin to Form in Asia as Air Peak Season Approaches.

Port of Montreal Dockworkers Begin Three-Day Strike at Two Terminals.

Spot Rate Decline Slows, But Prices for Some Long-Term Ocean Contracts Soar

The Port Strike is Over. Here’s What Happens Next.

Warning of Peak Season Airfreight Capacity Challenges out of Asia.

We’re So Thirsty for Cheap Chinese Stuff that There Might Not Be Enough Planes to Ship It.

materials

We’ve become used to hurricanes impacting supplies in coastal areas of the world (e.g., Gulf Coast oil, gas, and resin facilities)—but inland? While the extent of the damage from Hurricane Helene is just beginning to be assessed, the latest monster storm is a reminder that the impacts of climate change are reverberating in new places and new ways. For example, it turns out the world’s largest supply of the high-purity quartz used in semiconductors is mined in North Carolina. As NPR put it, “a tiny town in North Carolina that’s just been devastated by Hurricane Helene could end up severely disrupting the global supply chain for microchips and solar panels.”

Meanwhile, the State of California threw a hand grenade into the future of plastic packaging when it filed suit against Exxon Mobil for “deceiving the public to convince us that plastic recycling could solve the plastic waste and pollution crisis when they clearly knew this wasn’t possible.” According to a 2022 US Energy Department of Energy report, only about 5% of plastic waste is recycled. While it’s far from clear what happens next, this action could lead to much-needed growth in US recycling infrastructure. The lawsuit is also certain to boost public awareness about the current limits on infrastructure, creating new opportunities for CPG companies that are incorporating more sustainable substates into their products and packaging.

While the public relations and legal fallout from California’s Exxon lawsuit will take time to play out, retailers continue to independently move forward with plans to cut back on plastic packaging. Walmart, for example, has set out its sustainable packaging goals. A near-term goal: eliminating all PVC and polystyrene packaging in the company’s private brands by 2025. The company has also committed to eliminating “unnecessary plastic packaging” in its private brands; Walmart reports that it has made 55% progress toward its goal of having all of its private-brand packaging “recyclable, reusable or industrially compostable by 2025.”

While plastic may or may not be in vogue tomorrow, for right now demand for and supplies of both PE and PP are good. PET supplies are also generally solid, although a severe drought in Mexico forced closures of factories earlier this year and more bad weather could still threaten imports. On the post-consumer recycled (PCR) front, supplies for PET remain steady, while HDPE and PP supplies are tighter. Prices for all PCR materials are higher overall than a year ago. CPG companies are increasingly incorporating recycled material into their packaging, driven in part by PCR mandates in New Jersey and other states. 

Learn More

A Tiny Town Just Got Slammed by Helene. It Could Massively Disrupt the Tech Industry.

California Sues Exxon, Alleges Plastics Deception

Walmart Sustainable Packaging Goals

we-can-help

• We are leveraging our domestic and global scale to efficiently manage your local, long haul, and international transportation, using state-of-the-art technology, to deliver what you need, when you need it.
• We are continuing to develop our organized planning and execution technology platform to manage ocean and air imports. The new platform provides visibility from Purchase Order release through final mile delivery. It also offers comprehensive data collection to drive service metrics for improved performance management.
• We are continuously managing routing guides to ensure products are flowing seamlessly across the globe. This includes identifying alternative options to minimize imports into the US East Coast as needed to mitigate the impact of possible work stoppages in 2024.
• We are developing custom domestic and international supply chains for our customers by leveraging our diverse supply options, high quality suppliers, and large warehousing network.
• We are working with our customers to develop and monitor stocking programs to ensure steady supply and just-in-time deliveries while leveraging our suppliers’ improved lead times. Ask about a warehousing agreement and how it could help you manage your inventory and hedge against supply disruptions. 
• We are supporting our customers in customizing or redesigning their packaging to resonate with consumers as they modify their purchasing decisions to achieve more perceived value. Ask us how our design and decorating capabilities could elevate your packaging.
• We are leveraging our reliable supply of domestic and international glass container manufacturers to support our customers for just-in-time delivery. 
• We are leveraging our global reach to adjust to everchanging supply conditions and ensure that we’re providing our customers with the best solutions. Ask us how we can optimize your package, including efficient design, localized production, and lower freight costs.
• We continue to leverage sustainable supply options and share those with customers developing their sustainable brand stories. 

For more, contact your TricorBraun packaging consultant or marketing@tricorbraun.com.

TricorBraun’s proven process will guide your packaging decisions from napkin sketch all the way to the retail shelf. Click below to get started.