When selecting a FIBC big bag supplier there are many factors that go into the decision-making process including price. Many factors contribute to the cost of the bag you’re buying, but how do these factors affect the price of each bag? Pricing can change monthly and here are 4 of the biggest contributing factors why.
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1) Cost of Raw Materials (Resin)
The bulk of the raw materials that go into producing an FIBC are polypropylene which is a thermoplastic. This means it can be melted into a pliable state then cooled to return it to a solid state. Like most raw materials and commodities, polypropylene resin prices fluctuate in price and the price that a manufacturer paid one month most likely will be different the next month.
With the cost of polypropylene resin fluctuating on a daily, weekly, monthly basis, this is a contributing factor in the fluctuating price of the big bags that you’re purchasing.
2) Cost of Labor (Manufacturing)
Today, we live in an automated world where, in many industries, robots do a lot of the heavy lifting when manufacturing products. This is not the case when it comes to FIBC big bags. Once your order has been received, large machines cut swathes of fabric for your bag, but even today, bulk bags are still hand sewn and a majority of the stitching is completed by hand.
India and China are two of the major manufacturers of bulk bags producing millions of bags each year. With growing labor costs in these developing countries, the cost of bags has increased over the past years, especially as popularity and product adoption has grown as well.
3) Cost of Freight (Getting the Bag to the U.S.)
Cost of freight is a large determining factor of the price you pay for each bag. Each bag manufactured overseas travels a long way to make it to your facility. Only a few transportation companies have the ability to transport large quantities of products across the globe, leaving very little room for negotiation.
Once your bags arrive in the U.S. and make it through customs, it is usually a train ride to their destination city and then a truck ride to the supplier's facility unless it is being shipped directly to the end consumer (some customer orders are handled this way). As you can see, there are quite a bit of touch points and a lot of transporters/shippers used to get the bag to its final destination, thus factoring into the cost of your bag.
4) Foreign Exchange Rates (How Powerful the Dollar Is)
The preferred currency of international business/trade is the U.S. dollar. Naturally, the U.S. dollar fluctuates on a daily, monthly, and yearly basis and can affect buying power around the world. Of the 4 major contributors to the price of your bulk bag, this is the most uncontrollable factor that can contribute to the price of the bags that you’re buying.
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Thanks for reading our blog post "Economics of FIBC Bulk Bags - What Determines the Cost of Your Bulk Bag"!
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