Price Hike Trends Spill into Containerboard and Boxes

palletsIf you know what’s happening in lumber, shipping, and trucking, you probably aren’t surprised to learn that containerboard prices are going up. Customers have been steadily informed over the last few weeks of increasing prices on linerboard, corrugating medium, sheets, and boxes. This in itself isn’t a great shock. However, the size of the increase has jarred many box buyers, and they are concerned about the significant rise in annual cost.

Most major containerboard producers have estimated a whopping $50/ton price increase on linerboard, corrugating medium, and/or recycled medium. Additionally, boxes and sheets will see increases around 10%-12%.

The cause for the increase can’t be narrowed down to one factor. Fluctuations in the market as well as supply and demand have contributed to the widespread change. Additionally, outages and other setbacks caused by unforeseen events have hit mills hard. For example, Hurricane Matthew resulted in extensive mill outages along the south Atlantic Coast. International Paper and PCA’s DeRidder mill recently experienced explosions that greatly impacted production.

In announcements to customers, producers are citing escalating input cost pressures, like rising OCC (old corrugated container), natural gas, and freight costs. Mill prices have to reflect their own expenses for raw materials, chemicals, and energy needed to produce the containerboard.

Solutions?

Box buyers who are scrambling to find alternative solutions may seek out other material options. This may not be a feasible approach for many, however. Rather, changes in process and approaches may be the answer. Cost reduction may be found by way of Lean strategies, sustainable options, reusable packaging, or other programs designed to focus on operational costs rather than materials themselves.

Packnet Ltd is an industrial packaging company that focuses not only on the protective qualities of a package, but the long-term impact on cost. We are experts at solutions that work. So while the price increase does affect our cost of materials, we are ever dedicated to finding the answer that will protect your assets as well as your bottom line. We are exceptional at handling large, heavy, and fragile packaging needs. Contact us or request a free assessment: 952-944-9124.