Asian crisis touches commodity bulk bags
By Staff -- Purchasing, 11/5/1998
The Asian economic crisis may solidify an ongoing shift in the market for flexible intermediate bulk containers (fibcs). Bulk bag importers can now take advantage of what may be the lowest possible prices for commodity-type bags--prices that domestic producers are unlikely to beat.For several years, commodity bag imports have been eating away at domestic supply markets. Lower labor costs have resulted in lower-priced bags. Some domestic producers have moved pieces of their operations to Mexico, but even Mexico can't compete with wages found in a struggling, declining Southeast Asia.
Tags for commodity bags should decline further in the months ahead. "Prices will continue to drop, but it's pretty close to the bottom already," says Danyel Tiefenbacher, product manager at IPD Packaging--a bag importer and distributor. "We may see prices decline an additional 3%-5%."
The quality of imported bags--which had been a problem from some suppliers--has been improving as well. Bulk bag importers have been building strong relationships with key overseas manufacturers--relationships that examine quality as an important concern. IPD Packaging, for example, distributes US-made bags, but also has built a strong relationships with selected South European and Asian manufacturers to shore up supply and quality.
One savior: New markets
But all is not lost for domestic fibc manufacturers. For one thing, bulk bags continue to find new applications, and are growing significantly in some key areas, such as plastics and agricultural industries. According to producers, demand for fibcs is growing between 10%-15%/yr. Some bulk bag producers say they're seeing growth of almost 20%/yr on specialized products. "It seems that domestic manufacturers don't have many options," says Tiefenbacher. "They will continue to move toward specialty bags, because they can't compete with the labor costs of standard stock bags."
By developing bags for niche markets, U.S. producers are able to keep their margins high--because specialty bags carry higher price tags. And for many buyers, the extra cost is worth it. Suppliers have on offer bags for such niches as anti-corrosive applications, hydroscopic products, lined-bags for liquids, bags for contamination or moisture concerns, or bags for viscous products. New designs, and new applications are coming to market all the time. Bulk-Pack, for example, recently added Cubepak baffle bags. The design of the bags allows it to hold 25%-30% more material while maintaining a cube shape during storage and shipping. Baffle-bags are just one example of an innovation that has become popular across many applications.
Another direction domestic producers are taking is the offer of recycling and refurbishing to customers. Stone Container/Marino Technologies, for example, has a program called Recyclebin Services, which collects fibcs from their customers' end users and refurbishes them for the original customer. The bag is recycled when its life is over.
The upshot
The end result for buyers is good. Cheaper commodity bags and more specialized bags are both beneficial. Yet there may be a shakeout. There has been a flood of new companies offering imported bags--and not all can survive. The most likely winners will be those who have set up strong supply relationships with their overseas manufacturers, and who monitor the production process to ensure that they deliver well-made, well-priced bags. As well, the type of consolidation seen this year among domestic drum and IBC producers may now spread to bulk bags. Even long-established domestic manufacturers may find mergers and reorganization necessary to face the changing focus of their businesses.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
