It’s easy to see how the war in Iran impacts the price of gasoline at the pump, but why is it having an impact on packaging costs? A report from Berlin Packaging explains the relationships among crude oil prices, logistics and packaging materials.
Following are excerpts from that report, with some paraphrasing:
“Crude oil prices have risen by over 60% since February, topping over $120 per barrel at their peak. Because packaging materials are closely tied to crude oil, natural gas and global logistics, this crisis is driving a rapid inflationary cycle that is impacting plastics, metals (aluminum and steel), glass, paperboard, fuel and freight shipping.
“For packaging converters and CPG companies, the implications are immediate and far-reaching: packaging costs are rising rapidly across nearly every material category at once.”
At the core of the disruption is the Strait of Hormuz, the route for 20-30% of global crude oil and liquefied natural gas (LNG) shipments. Its closure has severely restricted trade flows and idled hundreds of vessels, tightening global supply and pushing up prices for fuels and petrochemical inputs. These inputs — such as ethylene and propylene — are essential feedstocks for plastic resins and many packaging materials.
And of course, rising energy prices are increasing the costs of all manufacturing and transportation expenses.
Plastic packaging has experienced some of the most extreme volatility. Resin prices, which typically change only slightly, have surged at unprecedented rates. Polyethylene (PE) and polypropylene (PP) have seen multiple, consecutive, large price increases, driven in part by shifts in global supply. With Middle Eastern exports disrupted, buyers have increasingly turned to North America for supply, tightening domestic availability and pushing prices higher.
This shift has also disrupted traditional pricing systems, replacing stable contracts with more volatile, real-time market pricing. “While current resin supply levels remain sufficient to meet baseline demand, the market is showing early signs of strain. Suppliers have begun signaling the potential for allocation, and some have issued force majeure declarations on contractual commitments.”
Metal packaging, particularly aluminum, is also under significant pressure. “The Gulf region accounts for roughly 9% of global aluminum production and a significant share of exports. With instability in the Strait, analysts estimate that 4-5 million metric tons of aluminum supply could be at risk, reducing global supply availability.
“Some Gulf aluminum smelters have curtailed or suspended operations because of a lack of raw materials. Restarting these smelters could take weeks or months. Furthermore, two large aluminum smelters in the Gulf sustained damage to their factories from missile attacks. Fully restoring production at one of those facilities could take up to a year. Thus, it may take supply chains many months to normalize and achieve pre-conflict efficiency.”
As a result, global aluminum prices have climbed sharply, reaching their highest levels in four years.
The U.S. and Europe, which rely partly on Middle Eastern imports, are facing intensified competition for alternative supplies. These cost increases are rapidly passed through the supply chain, especially in high-volume applications like beverage cans.
Glass packaging is heavily impacted by energy costs because production requires extremely high temperatures fueled by natural gas and electricity. Since energy can represent up to 30% of production costs, rising fuel prices have led to higher prices for glass containers. In some regions, especially those dependent on imported natural gas, supply disruptions have reduced output and driven price increases. Even where supply remains stable, imported glass faces higher shipping and fuel surcharge costs.
Paperboard markets are also adjusting to rising costs. Paper production is energy-intensive, and higher fuel, logistics and labor costs are pushing up prices for materials like containerboard and boxboard. While North America maintains adequate supply due to strong domestic production, buyers are facing longer lead times and reduced flexibility. Demand remains relatively stable as companies build inventory to buffer against ongoing disruptions.
Transportation costs have risen sharply across all modes due to fuel price increases. Diesel prices in the U.S. have surged, significantly impacting trucking costs, where fuel can account for up to 40% of expenses. Fuel surcharges have driven up truckload, parcel and rail shipping rates. Ocean freight has also become more expensive, and slower shipping speeds have increased transit times. Air freight is experiencing reduced capacity and higher costs due to rising jet fuel prices and flight cancellations.
Overall, the disruption is forcing packaging buyers to contend with rising costs, supply uncertainty, reduced flexibility and increased volatility. The report emphasizes the importance of strategies such as diversified sourcing, material substitution, improved logistics planning and innovative packaging design to mitigate risks and build more resilient supply chains.
About the Author
Dave Fusaro
Editor in Chief
Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.