Corrugated Fiberboard Packaging – 2021 Price & Availability ImpactedAnna Lee
As we recently explained in a post on the plastic market, we at Packnet are acutely aware of the market volatility impact across several packaging-related commodities. From wood to plastics, production slowdowns and material shortages are up against unprecedented demand from manufacturing, construction, and consumers, particularly as buying habits shift to favor remote consumption and home-centric improvements. Add in ongoing transportation challenges related to the pandemic, and more recently the weather, its a perfect storm of far too little supply for skyrocketing consumption.
Corrugated fiberboard and paperboard is also feeling the squeeze. The corrugated industry has not seen material-related increases since 2018, but significant increases are coming through in order to position manufacturers and converters ahead of rising costs. In addition, lead times for some board products are twice what they were prior to March 2020.
There are several contributing factors to this situation. Distribution changes that accommodated distancing created a vacuum for fiberboard products. So many things arrive at the door via cardboard boxes these days, which is a dramatic increase in use compared to in-person retail sales. And, to add further strain to production, consumer recycling is not capturing enough to sufficiently support the increased through-put. In short, in-person retail uses fewer boxes and that system does better recycling used products back into the supply chain.
Transportation challenges are also a factor, and that goes beyond lead time. Shipping delays and driver shortages directly impact corrugated material prices, as cost impacts outpace the ability for material manufacturers to absorb or otherwise mitigate – it’s hitting them enough that their prices have to go up.
Though the corrugated market does not seem as dire of a situation of that of wood or plastics, particularly after the weather impacts in February 2021. However, we are still cautious to assume current increases and lead time issues for board products are short term. If 2020 and Q1 of 2021 have taught us anything, it’s to not make bets on commodity or supply chain matters.
Please contact our experts to discuss any and all things packaging and materials related. We’re here to help.