The global returnable packaging market has been witnessing considerable growth from the past few years on account of increasing preference for sustainable packaging solutions. Returnable packaging allows businesses to use similar packaging repeatedly over a significant period, thus it significantly saves the overall cost associated with the product packaging. This cost-effectiveness of returnable packaging, as compared to expendable packaging has also played a pivotal role in the penetration of returnable packaging in the end-use industries.
Returnable packaging, also referred to as reusable packaging, is majorly constructed by using robust material such as wood, plastic, and metal. These are designed to withstand rough handling over the complete supply chain to achieve multiple trips with the same packaging. During transportation, product damage significantly gets reduced by the application of returnable packaging owing to its sturdy nature; this factor has also been attracting businesses towards the returnable packaging products.
Returnable packaging products include primary packaging products such as beverage bottles and secondary or tertiary packaging products such as racks, pallets, and intermediate bulk containers. The end-use industries primarily utilize secondary and tertiary packaging for the transportation of products over the entire supply chain. The initial investment for such packaging is considerably high in comparison with disposable packaging; however, with increasing trips, lower cost per trip can be achieved, which ensures a rapid return on investment.
The critical factor which is principally attributing the growth to the Returnable packaging market includes the sustainability. It does not end up in landfill as in the case of disposable plastic packaging, thus helps in minimizing carbon footprints. Increasing sustainability awareness among consumers, coupled with rising regulatory pressure over the use of plastic packaging, is also expected to fuel the demand for returnable packaging in the coming years.
Conventional or expendable packaging is treated as waste materials after their intended usage or purpose. This further results in additional waste management costs, which does not incur in case of returnable packaging owing to their repeated usage. Furthermore, companies can also effectively save their storage space, and storage labor cost as a similar set of returnable packaging products are being used continuously. These advantages of the returnable packaging are also anticipated to augment the market growth in the coming few years.
A key shortcoming of the returnable packaging includes increased transportation costs. Returnable packaging needs to be sent back after their intended purpose, and thus, the return trip increases the overall transportation cost. Furthermore, theft and the damage of the returnable packaging products increases the overall packaging cost. However, effective and efficient use of the packaging throughout the supply chains reduces the risk associated with the aforementioned shortcomings.
Returnable packaging products are ideal during the transportation of high volume shipments with frequent deliveries, over the shorter distances. Furthermore, these should be employed when there is a dedicated delivery provider to avoid damage to the packaging. These are also used widely in case of frequent shrinkage or product damage, expensive expendable packaging, and for the disposal of the high volume of solid waste.
The global returnable packaging market is segmented on the basis of product, material end-use, and region. Based on product, the market is segmented into pallets, crates, intermediate bulk containers (IBCs), drums and barrels, bottles, and dunnage. The demand for IBCs is expected to grow considerably in the coming years owing to their increasing penetration in end-use industries on account of their high strength and long life span. Furthermore, in terms of material, the market is divided into plastic, metal, wood, and glass. Plastic accounted for the largest share in the global market in 2018 on account of its extensive flexibility and cost-effectiveness.
On the basis of end-use industries, the market is further bifurcated into automotive, food & beverage, consumer durables, healthcare, and others. Automotive manufacturers majorly use returnable packaging for the transportation of their semi-finished and finished auto components, such as body parts from the component supplier or vendor to the assembly parts. Frequent and short distance transportation of heavy and high volume auto parts prompts automotive manufacturers to opt for the returnable packaging. The steady expansion of the global automotive industry on account of expanding the middle class is expected to impact favorably on the demand of returnable packaging over the forecast period.
The demand for the product in the Asia Pacific is expected to grow at the fastest rate on account of the rapidly growing consumer goods industry in the region. Furthermore, increasing industrialization in the region, especially in India and China, on account of their lower production cost in the region is expected to boost the demand for returnable packaging products in the coming years. Expanding population coupled with rising disposable income is further anticipated to result in increased demand in automotive and other industrial products, thereby benefiting the returnable packaging market. Indian Government has been significantly investing in the development of public infrastructure and healthcare from the past several years, which is anticipated to impact favorably on the product demand.
The global returnable packaging market is moderately fragmented. Key players operating in the market include Brambles, DS Smith, Schoeller Allibert, Menasha Packaging Company, LLC., Myers Industries, and NEFAB GROUP. Key players are mainly focusing on the expansion of their portfolio to tap a larger share of the market.
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