Welcome to January’s update from our friends at Saxco , on market dynamics in beverage packaging.
Happy New Year from all of us at Saxco. We hope this year will be plentiful for your family and businesses. While the industry continues to face a series of complicated headwinds, we have a sense of optimism that the economic recovery evident in the numbers will finally be felt in consumer sentiment and our industry.
The “vibecession” illustrated by The New Consumer
As Albert Einstein said: “Learn from yesterday, live for today, hope for tomorrow.”
We still feel pressure on glass supply as the market prepares for a new US administration that brings with it a litany of tariff threats. Some companies are “pantry stocking” in anticipation of future costs, and others are building sourcing capabilities with domestic producers, which could result in an imbalance of supply and demand during this year’s harvest. The early part of the year will give a better view of whether or not the economic levers are used, how they would impact imported goods, and from where.
As we mentioned, the economy continues to show some great results, one being that fuel costs have dropped again from $3.522/gallon in November to $3.494. However, ocean freight from Asia to the US (both coasts) has increased due to the upcoming Chinese New Year slowdown. We started the year worried about a potential second strike – to be staged by the International Longshoremen’s Association on January 15th – at all US East and Gulf Coast ports. If this had occurred, no cargo would have been able to move in or out of any port along the Atlantic Ocean and Gulf of Mexico. The prevailing expert opinion was that for every week the strike persisted, there would be one month of backlogs and congestion. Fortunately, a tentative deal was reached, and things continue to move as usual. We are still at reduced domestic furnace capacity: This continues to be something we will watch closely going into the new administration.
And finally, lead time remains a bit longer due to the reduced furnaces and the pressures of increased demand. We are monitoring everything very closely as we enter the changing environment that naturally occurs when a new administration – with very different economic and trade perspectives to its predecessor – takes office.
Bottled Tidbits – Glass bottles did not become popular until the Victorian Age! And it was the fear of getting sick that made bottles the vessel of choice. With infectious diseases as the leading cause of death, everyone was scared of anything that could carry typhoid, cholera, tuberculosis, yellow fever, and so many more terrible diseases. London (and other big cities) experienced population booms but had inadequate sanitation infrastructure. To make things worse, medical science was still in its infancy, and an understanding of what made someone susceptible to illness ranged from a genetic problem to your economic status – as Laureyln Douglas summarized it: “The poorer classes, being underfed, were less resistant to contagion”.
Because of the Industrial Revolution, the cost of making bottles made it a perfect vehicle to deliver the two things people felt they needed to protect themselves from diseases. One was bottles filled with poison chemicals to deal with rat, mice, cats, dogs or anything they felt transmitted disease or to sanitize things they would use. The other was as a perfect vessel to carry “medicines” – laudanum, arsenic tablets, chlorodyne, antimony, or the famous Warburg’s Tincture. These medicines were not only to cure disease, but to help you smile more, make your spouse more compliant, deal with unruly children, and more. If you had anything that needed to be solved, there was a “cure” that could be purchased in a bottle. It’s no wonder life expectancy at that time was only about 40 years old.
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