Packaging and Labeling Services NAICS 561910

Mar 26, 2026 - USDA Cancels Program That Promoted Paper-Based Packaging

• In March, the USDA terminated the Paper and Packaging Board, ending a decade-long marketing program funded by manufacturers and importers to promote paper-based packaging, according to Packaging Dive. A recent referendum failed, with only about 26% of eligible participants, representing less than 10% of volume, supporting continuation. The program, funded by a 35 cents-per-ton fee paid by large, US-based manufacturers and importers of paper and paper-based packaging, had a $20 million budget in 2025 and helped drive demand, including an estimated 1.1 million short tons of annual packaging consumption from 2019 to 2023. For the packaging and labeling services industry, the shutdown removes a key source of coordinated marketing that boosted paper-based packaging adoption and supported the shift away from plastics. Companies may now need to increase their own marketing and innovation efforts to sustain demand and maintain momentum for paper packaging.
• The closure of the Strait of Hormuz is disrupting global supply chains, driving sharp increases in key inputs, according to Manufacturing Dive. About 30% of seaborne oil and 20% of LNG trade has been impacted, while crude prices have surged 47%, polypropylene 24%, and aluminum 10%, according to Germany-based management consulting firm Roland Berger. These increases are raising costs for plastics, packaging materials, and related goods, while longer transit times and higher freight expenses add further pressure. As petrochemical disruptions flow through to packaging production, companies may face margin compression or pass costs to customers. Firms are being urged to secure alternative suppliers, lock in logistics capacity, and reassess inventory strategies, as prolonged disruptions could intensify inflation and strain packaging supply chains.

• Packaging M&A activity is expected to hold steady or rise slightly in 2026, creating ripple effects for packaging and labeling services as companies pursue growth in a slower volume environment. Analysts say dealmaking will shift toward smaller transactions, divestitures, and portfolio refinement as firms respond to weak stock prices, limited organic growth, and lower interest rates, Packaging Dive Reports. This environment could spur demand for outsourced packaging and labeling services as companies streamline operations, shed non-core units, and integrate newly acquired assets. Private equity is positioned to play a larger role as many holdings near the end of their investment cycles, potentially accelerating carveouts that require new service partners. With consolidation likely across sectors such as boxboard, glass, and value-added materials, service providers may see increased opportunities tied to reconfigured supply chains, shifting customer needs, and a renewed focus on efficiency, sustainability, and value creation.
• Bain’s 2026 Paper and Packaging Report warns that structural overcapacity, volatile costs, and soft demand are pushing producers to make sharper capacity decisions, adopt AI-driven efficiency tools, and strengthen commercial discipline. These shifts could influence packaging and labeling services as manufacturers streamline networks, close or convert sites, and pursue M&A to rebalance assets and focus on profitable segments. AI-enabled maintenance and data-driven commercial tools promise lower costs and better throughput, which may prompt brand owners and converters to seek service partners that can support faster changeovers, tighter cost controls, and more precise SKU management. As companies target profitable customers and products, demand may rise for labeling and packaging services that offer flexibility, automation support, and sustainability features. The report suggests that competitive pressure and consolidation will continue to reshape service needs across the packaging value chain.