Paper prevails: Takeaways from Pack Expo 2024 in Chicago

Among the more than two thousand packaging and processing-solution providers at this year’s Pack Expo, attendees could find paper solutions to traditional plastic alternatives one after another, from Haso’s heat-sealable soft drink lids, Amcor’s cold-seal bar wrap, Celanese’s compostable and “ovenable” barrier lining, and Smurfit WestRock’s click-to-lock corrugated detergent box, to Ecorrcrate’s corrugated pallets. Even plastic packaging producers increasingly offer fiber-based solutions. Sighting one or two paper products among a booth full of plastics was common. However, not all paper solutions last. Paper bottles, which we saw multiple iterations of last year, seemed to have taken a step back this year, as it is currently difficult to prove their commercial viability due to cost, production inefficiency, and difficulty recycling because of their flexible plastic liner. Wood fiber still dominates, and fewer alternative fiber solutions (such as bamboo or banana leaves) were present compared to last year. The challenging economic environment in the past year has rationalized many green packaging innovations while dropping those that appear to be greenwashing.

Cost-neutrality needs a holistic approach

Despite the prevailing trends, substituting plastic packaging with paper is not easy, especially in the food and beverage space, which has higher requirements for barrier performance. Discussions both on and off the expo floor frequently emphasized the importance of maintaining cost neutrality, especially for North American consumer brands that do not currently face as much regulatory pressure as their counterparts in Europe. While packaging producers are working to bring down costs by improving efficiency and reaching for economies of scale, brands might want to take a more holistic approach on packaging costs and look beyond material and machinery costs. Optimizing packaging design could offset higher material costs, thus increasing efficiency and decreasing costs during transportation and storage; increased machinery cost (a capital expenditure) may be offset by savings on labor (an operating expense). Taking an all-encompassing approach will accelerate the transition to paper alternatives. Achieving cost-neutrality in paperization may be easier than most companies would expect.

Despite recent market challenges, a lot of plastic-substitution packaging comes in the format of molded fiber. Increasingly, packaging manufacturers are creating more shapes and depths of molded fiber products and improving the performance of barrier-lining options. Celanese, a UK-based chemical company, created an “ovenable” compostable film that is highly resistant to grease and water. This film increases packaging performance and reduces cost compared to the traditional spray-on coating, and it would support the growing adoption of molded fiber products for more food applications.

However, the adoption of molded fiber alternatives is not without its challenges. Low-value foodservice packaging, such as plates and trays, from Asia has flooded the market. These products are low in value but high in volume. Their import into the US at possibly below-production cost significantly disrupted the profitability of local production. On October 29, 2024, the US International Trade Commission launched an antidumping investigation on molded fiber products from China and Vietnam. We expect this investigation to restore market order in North America and support local production and sales of molded fiber products. The new Trump administration is expected to intensify the scrutiny of unfair competition as well.

E-commerce solutions grew their presence at this year’s Pack Expo. And they came almost exclusively in paper forms, from paper shipping materials to automated paper-packaging solutions. Various forms of paper tapes and endless types of paper void fillers, such as paper air cushions, bubble paper, and paper peanuts to name a few, were spotted across the floor. Smart Karton stood out with its All Paper Pack, which uses a cohesive paper lining (where the lining sticks only to itself) to secure products to the top of the corrugated box, eliminating the need for void fillers and creating a unique unboxing experience. While the overall material cost may be higher than traditional packaging methods, Smart Karton’s automated machines could help reduce labor costs and realize cost parity or cost reduction at higher volumes.

Corrugated containerboard is poised for significant gains from the steady growth of e-commerce, with RaboResearch’s latest forecasts estimating a 2.3% CAGR for demand growth and pricing surpassing USD 1,000/metric ton through mid-2026. We anticipate kraft paper will also see increased momentum as retailers transition to kraft paper bags and Amazon shifts away from plastic mailers. Increasingly, kraft paper is used to replace plastic film. For example, Canopy Wrap is a curbside recyclable solution for tray bundling using extensible kraft paper.[1] Lastly, this year’s expo showcased automated e-commerce fulfillment solutions at various scales, highlighting the need for investments in machinery, robotics, and adaptable paper-packaging formats.

[1] Extensible kraft paper is high in tensile strength, providing protection and flexibility during transportation.

While European regulators and consumers are more committed to sustainable packaging, many see the large market potential North America offers. European and Asian producers were prominent in the show, and they remain committed to North America. Stora Enso is doubling down on its US growth strategy, educating US consumer brands and independent converters on the benefits of imported folding cartonboard. According to a recent Fastmarkets estimate, currently less than 80% of bleached folding cartonboard consumed in the US is domestically produced solid bleached sulfate (SBS) board, with the remainder being mostly imported folding boxboard (FBB, a bleached grade mostly produced in Europe). Consumption growth in bleached grades is also expected to come mainly from FBB, increasingly competing with domestically produced SBS board.

We are increasingly seeing cross-border activities between North America, Europe, and Asia, not just through imports but also through construction of manufacturing capabilities in the US. Salaet, a Spanish paper and paperboard producer, is planning to open its first production facility in Pennsylvania in 2025, shifting weight from imports to a local strategy. However, it is not all sunshine and roses here either. SBS operating rates have been hovering around 80% for the better part of the last twelve months. Billerud put the brakes on its USD 1 billion project converting Verso Corporation’s Escanaba Mill into an integrated virgin cartonboard facility with 1.1 million metric tons of capacity, citing changes in economic conditions and return-on-investment projections.

We believe North America will continue to be a hot destination for imported paper and paperboard, especially when global supply is high, demand is weak, and ocean shipping stays relatively inexpensive. However, given the recent US presidential election results and Trump’s stance on tariffs across product categories, we would not be surprised if more European companies decided to adapt their strategy and produce in North America for the local market instead of importing.

Given the challenging macroeconomic conditions of the last two years, sustainability seems to have taken a back seat, but it certainly did not disappear from CEOs’ agendas. At this year’s expo, we continued to see producers from different parts of the paper supply chain collaborating and pushing innovation beyond the pilot stage into commercialization. Mother Parkers Tea & Coffee worked with Graphic Packaging International to launch paperboard canisters for its retail coffee brands. Smurfit WestRock worked with Atlantic Packaging to develop the Canopy Machine for kraft paper bundle wrap. Dart Container licensed PulPac’s technology and installed North America's first dry-molded fiber production line. Startup technology providers, packaging material and machinery providers, packaging converters and distributors, and consumer brands are still coming together behind the scenes to push sustainable packaging forward.