As the Iran war closes out its 11th week, the threats to businesses no longer are theoretical — especially for plastics sectors, including packaging. Higher plastic prices and supply struggles are evident, and experts warn the situation is on the verge of worsening barring a prompt conflict resolution. Regardless of when the war ends, the current impacts to the plastic packaging industry are expected to linger at least for the remainder of the year.

Commodity intelligence service ICIS has reported since March that the Iran war is contributing to a spike in plastic prices, notably for polyethylene and polypropylene. Prior to the war, polymer demand was soft amid a global oversupply of those two resins, and polyolefin producers' margins had been declining for a couple of years.

"We were getting close to the bottom of the cycle for those raw materials," meaning producers were at or near the point of rationalizing excess capacity to broaden their margins, Esteban Sagel, principal and CEO at Chemical and Polymer Market Consultants, told Packaging Dive.

The war quickly resulted in tighter supplies for virgin resins amid production disturbances, along with higher prices globally for both virgin and recycled grades, Andrea Bassetti, Americas team lead for plastics recycling at ICIS, told Packaging Dive.

Asian markets in particular, but also European markets, are much more strongly affected than the United States, "simply because both of those markets' supply chains are a lot more exposed to what's going on in the conflict versus the United States," Bassetti said. "A big part of that is, where does [the United States’] energy come from? A lot of it comes from ethane and shale gas, and not only crude oil."

That said, the effects from both global and domestic material supply challenges and cost increases are flowing down to North American converters of both plastic flexible and rigid packaging. This is highlighted in a newly released white paper from Berlin Packaging that raised alarms about the conflict "rewiring global packaging supply chains."

"The supply chains aren't nimble. There's going to be long-standing ramifications."

Jonathan Quinn

CEO of EGC Consulting

During a May 11 interview with CNN, Emerald Packaging CEO Kevin Kelly said the flexible packaging company has raised prices about 8% because of input cost increases — its largest ever monthly increase. Although customers aren’t happy, they expected this and understand this isn’t an isolated incident, Kelly told Packaging Dive via email.

“We’re living a nightmare of rising energy costs, supply chain disruption, and material shortages thanks to the conflict with Iran. Resin prices have already surged 115%,” Kelly said. If the conflict intensifies again, “we would see cost increases that make the ones we’ve seen so far look puny.”

Amcor doesn't have operations in the Middle East, and less than 5% of its resins are sourced from the region, confirmed CEO Peter Konieczny during a May 6 earnings call. If necessary, the company can raise prices for certain customers and pass through costs for its roughly 70% of contracted business.

Clearly, the question now isn't whether the conflict in the Middle East is affecting U.S. plastic packaging companies. It's a matter of how long and deep the effects will cut.

"The unprecedented price increases, particularly on polyethylene, are going to have lasting implications," Jonathan Quinn, CEO of EGC Consulting, told Packaging Dive. "It has a waterfall effect. There's not a way to just peel this back."

The timing of renormalization depends both on when the conflict ends and how long it takes for mitigation actions to work through various supply chains. Overall, experts say the war's end won't be like flipping off a switch for business shocks.

"I think the most important thing to remember in all of this is that the supply chains aren't nimble," Quinn said. "There's going to be long-standing ramifications, and it's going to create turbulence in the marketplace for a long time."

Petro and plastic problems

The plastic supply chain problem stems in part from the considerable share of global polymer production that occurs in the Middle East. The region is the top global PE exporter, accounting for about 40% last year. Bombings have damaged a significant amount of the region’s petrochemical infrastructure, and petroleum-derived naphtha is a key polyolefin feedstock — including for polymer grades used in packaging.

In addition, the war is driving higher fuel and transportation costs, which ultimately hit material producers' and packaging companies' bottom lines. Global petrochemical and polyolefin movement has been stunted because a large proportion of those materials ship through the Strait of Hormuz — which has only seen a trickle of ships pass through since the war started Feb. 28.

Some observers are pointing to impending plastic and packaging shortages in Asia, the region experts say has been hardest hit. But in North America, the second-largest global PE exporter, "our cost to manufacture polyolefins — polyethylene, in particular — is linked to the cost of ethane, a natural gas component that has not increased in price like those oil-related products in the Middle East and in Asia," Sagel said.

That doesn't mean North American polymer production is immune to war impacts. Supply disruptions globally have spurred greater demand for North American PE exports, Sagel said. And within North America, polyolefin demand jumped in March “because converters got concerned about potential price increases. They got ahead of those, and rapidly increased domestic demand," he said.

Alongside escalating demand, North American plastics producers have announced polyolefin price increases. That's the case for LyondellBasell, co-headquartered in Houston and London, which declared a series of PE price increases since March as demand sharply rose. This mirrors other domestic producers' increases, including at Michigan-based Dow.

"We anticipate that shutdowns, feedstock limitations and logistical constraints will continue to reshape polyethylene product availability across [global] regions," Dow Chief Operating Officer Karen Carter during the company's April 23 earnings call, said. "Supply and feedstocks into Asia and Europe are constrained, which is triggering price increases globally. It is also leading to increased production in the Americas and is providing Dow the opportunity to capture new business in Europe."

She estimated that roughly half of global ethylene and polyethylene supply is "offline, constrained or directly impacted. These are unparalleled numbers."

According to leading pricing indexes, polyolefin prices — especially PE — so far have increased every one of the nearly three months of the conflict so far. These increases are "unprecedented," Sagel said, noting that bumps of three to five cents per pound typically are considered large, but the current hikes are on the order of 10 to 30 cents at a time.

"We have never seen such a rapid and big increase in indexes in this period of time, or in history. And that could result in massive increases in the cost to manufacture film and other packaging within North America," he said.

Sourcing swings?

Early in the conflict, industry observers had speculated that higher prices for virgin plastics could be the push that brands and packaging companies need to source more recycled material. Prices for recycled have followed virgin's demand-based increases, but there’s little evidence so far of any demand boosts for recycled, sources say.

"What I'm calling ‘true demand’ for recycled material is still low. However, we saw some price increases — and all of that was purely in reaction to what was going on on the virgin side," ICIS’ Bassetti said. "But as soon as the conflict starts to ease, I would expect that we would see a pretty big crash in [recycled] prices, because there is no real demand."

Prior to the conflict in the Middle East, some brands and packaging companies deprioritized certain sustainability initiatives, such as adding more postconsumer recycled content into packaging, she said. That was largely driven by choices to use cheaper virgin material to cut costs. The cost-consciousness remains today and continues to depress recycled plastic demand, Bassetti said.

However, about two weeks ago "we did see the virgin pellet prices — for PET, at least — surpass the recycled pellet prices," she said. But that won't make a notable difference with recycled plastic demand unless the virgin prices rise higher and stay there for a period of time, because "nobody's prioritizing" sustainability at the moment.

One positive aspect of the war is that it has re-upped the value of sourcing material domestically, Quinn said.

"It's harder to get and transport material from outside the U.S. This, in turn, should also help to grow the recycled content market inside the U.S. and help to create price compression," he said.

What next?

As the war approaches the three-month mark, experts say one thing is certain: The longer the disruption lasts, the more severe the effects and the longer recovery will take.

Oil is a prime example of a commodity subject to asymmetric price movement, frequently referred to as the "rockets and feathers" effect. In this economic phenomenon, events cause prices to immediately shoot up like a rocket, but following the disruption prices take longer to float down again, like a feather.

Generally, experts believe war-related supply chain disruptions will take at least 60 to 90 days to substantially unwind from their current state, and price adjustments should follow. ICIS projects that it would take at least three months for plastic prices to begin normalizing once material flows readjust. If the conflict is resolved in May or June, plastic supply chain recovery likely would occur for the remainder of 2026, with renormalization sometime next year.

"Prices will start decreasing, but it'll take all the way into 2027 for us to get back to where we were," Bassetti said. "The virgin side will probably feel a longer recovery."

If the war stretches beyond June, conditions are expected to notably worsen across global supply chains. Many leading economies, including the United States and China, have strategic inventories of commodities like oil to help weather short-term disruptions. But certain reserves are dwindling, putting countries on the precipice of serious plastics shortages and skyrocketing prices.

This week, Bloomberg reported that Morgan Stanley analysts flagged that the global oil market is in a "race against time" before the buffers in place run out and oil prices spike, with Brent crude oil prices poised to reach record highs if the Strait of Hormuz effectively remains closed through the end of June. Goldman Sachs offered a similar discussion about buffers, and last week one of its analysts projected a six to nine-month period for oil production and shipments to renormalize — not just from the strait closure but also from infrastructure damage.

Packaging companies generally aren't banking on a quick recovery in Q2 or Q3, either. Silgan's Greenlee expects some cost recovery "as resin markets decline in the future," but that's months away. “It's going to be spread over a longer period of time, and I would not anticipate that probably starting before potentially Q4 and well into '27."

Dow anticipates the duration and severity of negative effects to polyolefin production will create lasting industry impacts, potentially including capacity shutdowns. “It is not likely that the pricing impact of these events will be temporary," Carter said, suggesting a six- to 18-month recovery timeline.

If the Strait of Hormuz remains blocked for another week, further plastic price increases are likely in June, Kelly said, but pricing isn't the only issue.

“I expect shortages in some materials to spread across our sector as we go into summer, especially in polypropylene film,” Kelly said, mentioning specific products like salad bags. “Given the Strait of Hormuz remains closed with no end in sight, manufacturers across the packaging industry will face additional [price] increases that inevitably make their way to grocery shelves and consumers.”

Several plastic packaging companies likely won't be able to withstand sustained elevated input costs or the time and effort necessary to source material from elsewhere, and they potentially could downsize or close, sources say. On the sourcing front, "everything has been optimized to run the way it does — lines, equipment, packaging format — and you can't just swap those materials out. It takes a long time," Quinn said.

"At the end of the day, these companies have to make money" and have to assess "whether they can stand to survive" current conditions, he said. "That's going to be a very difficult question."

This article was written by Katie Pyzyk from Supply Chain Dive and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

For about 1.1 million Amazon sellers in the US, January 1, 2026 closed the door on a service they had taken for granted: FBA prep. FNSKU labeling, poly bagging, bubble wrapping, suffocation warning labels. Amazon's announcement, dated July 28, 2025, gave the market five months to rebuild a function that used to come bundled with the fulfillment fee. US FBA inbound policy has shifted from “drop it off and forget it” to active supply chain management, with the cost of getting it wrong now landing in the seller's account, not Amazon's.

Importers feel it too. Amazon Global Logistics, AWD, and SEND used to fold prep into the inbound flow. That bundle is gone. Sellers now coordinate freight, customs, and prep separately, juggling three providers, three invoices, and three different levels of transparency. Freight exchange interfaces are gaining traction precisely for this reason. Through a reverse auction, carriers bid on inbound shipments, and the seller sees landed cost before the container leaves Asia. Carriers on the platform deliver and AiDeliv stays an interface for market-driven rates.

Who took the biggest hit

Small and mid-size sellers shipping 100 to 500 units per month carry most of the weight. A Distribution Alternatives survey from September 2025 found 64% of sellers expecting major operational impact. The pressure shows up in another number: 165,000 new sellers registered in 2025, the lowest count in a decade and a 44% drop from 2024. FBA compliance now demands real operational infrastructure from day one, covering everything from FNSKU labeling to poly-bagging requirements and suffocation warning labels.

DIY looks cheap on paper. Run the math with 10 hours of labor per week at $25 an hour plus a 15% compliance error rate, and the Inbound Defect Fee swallows the savings.

“This is one of the most significant operational shifts Amazon has made in recent years. Getting ahead of it now will be key to maintaining smooth replenishment and avoiding compliance issues next year,” Charles Williams of Blue Wheel told Supply Chain Dive in August 2025.

What's actually ending and what penalties replaced it

Amazon labeling policy 2026 ended every prep service offered through the US marketplace: FNSKU labeling, poly bagging, bubble wrapping, carton prep, kitting, double-boxing for fragile items, and suffocation warning labels on poly bags. Before the shutdown, Amazon charged $0.55 per FNSKU label, $0.70 for basic poly-bagging, and $0.80 to $1.50 for bubble wrapping. The fees crept up in February 2025 ahead of the final wind-down.

Replacing those old fees is a single, blunt penalty: the Inbound Defect Fee at $0.60 per unit. For certain non-compliance categories, the financial impact runs 10 to 80 times higher than before. A 500-unit shipment with a labeling defect now costs $300 in penalties alone. Suffocation warning labels on apparel and plush items are entirely the seller's job. Even at the API level, AMAZON is no longer accepted as a value for prepOwner or labelOwner. The optional handoff to Amazon is technically closed.

3PL prep centers as the new standard

The 3PL prep center is now the default channel for seller-sent shipments. AMZ Prep starts at $0.40 per unit for high-volume sellers (2,500-plus units per month) and bundles receiving, labeling, and poly bagging. Pattern brings proprietary warehouse tech with transparent pricing. ShipBob covers the SMB end with multi-channel fulfillment across Amazon, Walmart WFS, and Shopify from one location.

What sellers are actually buying from 3PL prep centers in 2026:

• Receiving and QC for inbound containers and domestic LTL deliveries

• FNSKU labeling at item level and carton level

• Poly bagging, bubble wrapping, and specialty packaging for fragile or oversized SKUs

• Suffocation warning labels for apparel, plush toys, and textiles

• Kitting and bundling for multi-pack and subscription SKUs

• Multi-channel fulfillment that layers on top of Amazon FBA

Outsourcing is not the only path. Sellers increasingly push prep upstream, asking their manufacturer in China or Vietnam to apply FNSKU at the time of packing for $0.05 to $0.15 per unit, well below the $0.40 to $0.70 charged by US prep centers. The SIPP program (Ships in Product Packaging) shaves another $0.04 to $1.32 per unit. A hybrid model has also become the norm for merchants between 200 and 1,000 units per month: DIY on simple SKUs, 3PL on the complex ones.

What ending prep means for inbound freight

For importers, the end of prep services rewrote the path from factory to Amazon shelf. The AGL to AWD to FBA stack used to be a single track with prep already baked in. Today's chain has four independent links: international freight forwarder, customs broker, 3PL prep center, and the final hop into an Amazon FC. Landed cost transparency stops being a nice-to-have. It becomes a planning input.

Two choke points dominate this architecture. The first sits on the Asia-to-US port leg of freight forwarding. Rates run opaque, spot prices swing week to week, and DDP terms require duty math finalized before the container loads. The second sits between the port and the 3PL prep center. A seller needs either direct drayage from LA, Long Beach, Newark, or Savannah to the prep warehouse or shipment aggregation with other cargo to bring per-unit costs down.

Reverse auction platforms address that first choke point directly. A shipper posts a request for an inbound container or an LTL load on a freight exchange interface, carriers bid, and the seller picks a market rate with transparent DDP math. The interface only provides the comparison engine. Shipment aggregation at the platform layer pushes per-unit costs lower for sellers moving less than a full container.

“For millions of FBA sellers,'What do I do next?' is suddenly a front and center question. Disruption always brings opportunity. Sellers who take proactive steps now to adapt to Amazon's prep service changes will be best placed to thrive in 2026 and beyond,” Rob Hahn, Chief Operations Officer at Pattern, wrote on the Pattern blog in August 2025.

Four months into the new model, the picture is clear. 3PL prep centers are running at capacity. DIY survives only at the small end. The combination of a 3PL prep center plus transparent inbound freight is now the operating standard for any serious Amazon business. Amazon FBA prep services left behind a fragmented ecosystem, but a more competitive one.

On July 1, 2026, the EU scraps the €150 duty exemption on parcels arriving from outside the bloc and replaces it with a flat €3 charge per item. The decision, approved by the EU Council in June 2025 and backed by the EU Parliament a month later, hits roughly 93% of cross-border e-commerce EU flows. Shein, Temu, AliExpress, and tens of thousands of independent non-EU sellers sit in the line of fire.

The EU customs reform 2026 rewrites inbound freight economics for the entire mid-market e-commerce segment. Direct-to-consumer parcels from China, the US, and the UK are giving way to bulk shipments routed into EU warehouses, where one customs declaration covers the full batch. Reverse auction freight exchange interfaces are tracking rising demand for trans-Atlantic inbound lanes with transparent DDP pricing and built-in shipment aggregation. Carriers on the platform deliver. AiDeliv stays a pure interface for market-driven rates.

What Actually Changes on July 1, 2026

The EU customs reform 2026 swaps the old €150 threshold for a flat customs duty of €3 per item inside a parcel. This is the EU's first formal low-value parcel duty, and the math runs through CN code tariff classification. An order with three SKUs and three different CN codes pulls three separate €3 charges. Sellers often miss this during landed cost calculations.

Under the old regime, a parcel valued under €150 cleared duty-free, although VAT and customs declarations remained mandatory. After the reform, every parcel from outside the EU faces customs regardless of value. The IOSS VAT mechanism keeps running for VAT, but it now sits alongside the €3 duty instead of replacing customs filing. Accurate HS codes and declared values become critical. Errors translate into delays and fines.

Why the EU Is Pulling the Trigger

The de minimis removal addresses a decade of runaway growth in low-value parcel volumes from outside the bloc and persistent undervaluation. Declarations were arriving in the billions per year, Member states' customs authorities couldn't keep up with verifying declared values, and EU retailers were vocal about being undercut on price.

The EU Parliament tied the €150 exemption removal directly to consumer protection and a level playing field for legitimate EU sellers in its July 2025 Resolution on product safety and compliance. The EU Council backed a customs handling fee starting November 2026, a separate charge layered on top of the €3 duty. The reform is designed as a bridge to the EU Customs Data Hub, scheduled to launch in mid-2028.

The Hit on Non-EU Sellers and the Push Toward EU Fulfillment

The hit lands hardest on small and mid-size non-EU sellers in the EU market segment who built their model on direct-to-consumer shipping. A per-item €3 duty combined with the handling fee makes that flow economically unviable for low-AOV (average order value) categories.

The strategic response is already taking shape. US brands that treated the UK as a continental foothold after Brexit are now moving inventory into EU-based warehouses. Wroclaw, Poland is now a hub: close to Germany, with fast transport links and lower labor cost.

Factors pushing non-EU sellers toward EU fulfillment:

• Per-item €3 duty inflates multi-item orders dramatically when shipped direct

• Customs handling fee stacks on top of the duty starting November 2026

• Thousands of small customs declarations create operational overload

• Bulk freight to an EU warehouse means one declaration per container

• Fulfillment from inside the EU lifts marketplace ranking through faster delivery

Inbound Freight: Shipment Aggregation Becomes the New Standard

Shipment aggregation moves to the center of strategy for non-EU sellers on EU marketplaces. One large shipment into an EU warehouse, cleared under a single customs declaration, cuts administrative costs and removes the per-item €3 duty at the customs layer.

“By moving stock to a storage and fulfillment facility within the EU, US exporters can aggregate their customs obligations into single, large shipments, rather than incurring the cost, bureaucracy and potential delays that will arise as the new legislation clamps down on multiple low-value exports,” says Simon Clifford, International Logistics Group.

Transatlantic ocean freight on the US to Rotterdam, Hamburg, and Antwerp lanes is picking up fresh volume. The LCL (less-than-container-load) segment is expanding on the back of mid-size sellers who can't fill a full container. Reverse auction freight exchange interfaces give that segment a tool to compare market rates and lock in landed cost before the shipment leaves dock. The US scrapped its $800 de minimis exemption in August 2025. The EU is taking a different route: explicit per-item pricing instead of tariff surcharges.

What Comes Next: Handling Fee, ICS2, and the Customs Data Hub

The EU Import Control System (ICS2) is already live and requires upfront security data for all cargo entering the bloc. Starting July 2026, ICS2 data quality requirements sync with the new customs duty logic. A wrong HS code or declared value blocks unloading at the port. The customs handling fee approved by the EU Council in June 2025 kicks in November 2026. The exact amount has not been officially set.

The EU Customs Data Hub launches in 2028 as a single digital backbone for customs declarations across the bloc. The €3 duty fits this architecture as a transitional tool. The long-term model points to dynamic charges based on a full data trail per item. Non-EU sellers building clean data flows now hold the advantage going into 2028.