Packing and Crating

Most large manufacturers in the United States pack or crate their own goods for shipment, rather than relying on the specialty firms of this industry. Packing services in this industry, valued at $150 billion in 2008, are offered by many firms primarily engaged in other activities, such as shipping of freight. Firms specializing in the shipping aspects, however, are not included in this industry. Establishments in the industry typically offer a line of shipping-related services, such as supplying packing materials, physically packaging goods to the sender's specification, and transporting goods to and from the packaging plant. Some businesses also arrange for the final shipment of goods, either through third-party services or through their own shipping networks, and may offer clients insurance policies on goods shipped and computer tracking of goods.

Packaging and crating is a $100 billion plus industry, with four general segments classified by material type: paper and board, plastics, glass, and metal. A large, fragmented industry, it comprises thousands of competitors serving a variety of markets. The largest market for packaging products is the food and beverage industry, with health care products showing the strongest annual growth, at 5 percent. Food and beverage combined experienced annual growth in the 3 to 4 percent range during the mid- to late 2000s.

Characteristic of the 1990s, packing and crating was part of the rise in small business start-ups. They responded to the needs of successful entrepreneurships that could not afford the packaging and crating of their own goods. A niche market was born: the "co-packing" industry. The term was first used in France in 1998, but quickly spread to the United States. The concept was simple: by outsourcing the packing end of the business, many small companies could direct their resources to sales and marketing. By 1999, co-packing was common jargon in smaller businesses, and had been employed in several larger ones, including Land O' Lakes Dairy Foods and Quaker Oats.

In the 2000s, industry trends focused on packing materials, flexibility in accommodating various package sizes, flexible packaging, and tracking packages via Radio Frequency Identification (RFID) technology. Establishments in the industry were experimenting with alternatives to replace polystyrene packing peanuts with more cost-effective and environmentally friendly materials. Inflatable plastic bags and paper fill have been increasingly used, but peanuts proved less expensive, effective at protecting against damage, and simple to use.

Large retailers, particularly club stores and giant chains, have pushed firms in the packaging industry to provide more variety in packaging. With the need for packaging operations to be flexible and switch package sizes many times during a day, equipment has been designed to minimize changeover time. In addition to flexible operations, large retail chains have influenced the growth of flexible packaging--the use of such material as paper, plastic, or foil to form uniquely designed containers. The second largest segment of the U.S. packaging industry behind corrugated materials, flexible packaging accounted for 20 percent of the $150 billion U.S. packaging market in 2008, with revenues of $20 billion. Giant chains, particularly Wal-Mart, also influenced the industry by mandating RFID tagging in the distribution chain. Tagging at the product-item level allows for quick and easy checks for authenticity.

Among the industry leaders focused on packaging food products were Newstar Fresh Food LLC, of Salinas, California, and Peacock Engineering Co. of Geneva, Illinois. Peacock, which provided manufacturing and packaging services and had overall 2005 sales of $140 million, switched from providing a variety of services to focusing exclusively on food packaging in 2000.