Industry Wide Price Increase for Corrugated Board

Industry Wide Price Increase for Corrugated Board

If you use boxes for packaging you probably had a little sinking feeling after reading the title of this blog post. We felt the same way when we received the news, because this directly impacts us as well. It’s unfortunate but let us explain.

The corrugated market

Back in 2011, the pulp and paper industry was at its highest price point in over 30 years and this upward trend has continued through to 2018. In 2017, the demand for corrugated board increased by 4.2% to 234 billion square metres, reaching an all-time high. The reason for the price increase is simple economics, the supply cannot keep up with the demand. There are several factors that have attributed to this increase in demand.

Why the rise in demand?

Consumer spending has been on the rise in recent years and as people spend more, businesses produce more, sell more and hire more. This leads to consumers spending more on discretionary and non-discretionary products that require paper based packaging.

The growth in e-commerce has also significantly impacted the demand for corrugated packaging. As businesses continue to sell more online their need for corrugated boxes increases as the majority of items are shipped this way. It has also never been easier to set up an e-commerce business. Virtually anyone with a laptop and internet connection can set up a Shopify store and begin selling products online, substituting a storefront with a website and custom corrugated packaging.

Industrial production, which includes the mining, manufacturing, gas and electric industries, has also been on the rise and is expected to grow through 2019. Again, this means greater demand for many products that use corrugated packaging.

What does this all mean?

We’ve recently learned that North American container board mills will be increasing their prices which will affect our material cost by 8%. Even after absorbing a portion of this cost, we will have to pass on some of this material cost increase to our customers. It’s not ideal, but in order to remain competitive and provide you with the best possible product and service, we must adapt with the trend.

We hope this sheds some light on the upcoming months and with this price increase taking effect in March, there really is no time like the present to order your custom boxes.

 





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