US Packaging Machinery Shipments Reached $10.2 Billion In Value In 2022

Shipments of packaging machinery last year posted a growth rate of an estimated 12.4 percent over 2021 to reach a value of $10.2 billion, a State of the Industry report released by PMMI, The Association for Packaging and Processing Technologies reports.

The report was released during Pack Expo Las Vegas, which took place Sept. 11-13. PMMI produces the event.

The shape of PMMI’s packaging machinery shipments forecast is impacted by the performance of the market during 2020, it explained.
Overall, 2020 is looked upon as a growth year for many packaging builders. While the first half of 2020 was slow, demand picked up substantially in the second half of that year, which led to a spike in order backlogs amidst a strained supply chain.

The growth in shipments from increased demand in 2020 is reflected in 2021’s growth of 15.8 percent.

Backlogs for machine builders had been “exceptionally strong” since 2020, the report said. High demand coupled with production-delaying supply chain constraints pushed backlogs to record levels during 2021 and 2022. Backlogs continued to fuel growth in the first quarter of 2023; however, they are expected to decrease during the back half of the year.

Economic uncertainty and a high interest rate environment has led to conservative spending behavior by many end-users. While projects have not largely been canceled, they are being delayed while the market is in a “wait and see” mentality. This is slowing the growth of packaging machinery shipments in 2023 to a lower, yet healthy, 3.4 percent for the year.

PMMI’s report also touched on several additional themes:
•Light at the end of the tunnel for supply chain constraints. By the end of 2023’s first quarter, lead times had begun to “reduce drastically” for many components, which led to declines in machine lead times.

•Labor challenges plague machine builders. Many suppliers are having to re-think strategies regarding hiring and retaining labor, and many suppliers are leaning on technology like predictive maintenance to help bridge the skill gap.

•Higher interest rate environment affects end-user demand disproportionately. Amidst high inflation, the Federal Reserve has moved the federal funds rate to its highest point in two decades. This has impacted demand by end-users disproportionately, leading many smaller customers who are more reliant on borrowed funds to delay planned investments. This higher cost of borrowing, however, has not impacted large, cash-heavy end-users to the same degree.

•Price hikes have largely halted in 2023. A high inflationary environment coupled with widespread supply shortages led to price increases by the majority of packaging machine builders during 2021 and 2022.
But large price hikes have stopped in 2023 as raw material prices and component costs have begun to fall.

•Multi-client e-commerce facilities offer huge opportunity. E-commerce continues to proliferate. Within the e-commerce landscape, there is a trend toward multi-client fulfillment centers. This landscape will represent a large growth opportunity for packaging machine builders. Within multi-client order fulfillment, often the first investment in automation goes toward automating the packaging of orders.

•End-of-line machinery growing above market average. The fastest growing machine types in the packaging machinery market are located at the end-of-line. Greater penetration of automation within warehousing and logistics operations, in addition to challenges surrounding hiring and retaining labor for manual tasks, has fueled growth for end-of-line machinery.

•Sustainable packaging continues to drive machine design. The sustainability trend continues with ongoing emphasis by large consumer packaged goods (CPG) companies to increase the sustainability of the packaging used for their products. This can mean using more environmentally friendly material, or less materal altogether. For the machine builder, this increases the complexity of machine design.

•Robots continue to grow in use. Another trend that has been encroaching for some time is the growth in the use of robotics. Robotic systems are growing particularly strong in end-of-line applications. Robotic palletizers, for example, are being used in place of manual labor for lower throughput operations.

For more information about the report, or about Pack Expo, visit www.pmmi.org; or www.packexpo.com.