12 months that saw prices for cardboard boxes rise ten-fold
As UK society takes more tentative steps towards recovery in a post-Covid world, international markets have been faced with everchanging circumstances and trying to navigate through them – as indeed we all have. We all saw petrol prices plummet when we went into the first lockdown due to a drop in demand as we all stayed at home. Other commodities in sharp contrast have been in huge demand as well as being impacted by unforeseen events. So, we are going to try to explain the contributory factors behind the price hikes for cardboard boxes and why it’s now been coined the hunt for the new ‘beige gold’!
How cardboard boxes became hot property
So how did this all start?
Well as you have probably guessed, the 2 main reasons behind this have been Covid and Brexit – but what is interesting is just how these factors played their part in price rises and supply shortages.
The cardboard ‘lifecycle’ very much depends and relies on recycling. Before the pandemic, high street retailers played a huge part in this recycling process, returning used cardboard boxes for recycling that arrived in-store. With the start of lockdown, non-essential retail closed and along with that came the seismic shift to eCommerce and home deliveries – this situation turned into a perfect storm. This meant a significant amount of cardboard was no longer available for that all-important collection and recycling. The reality was it was all piling up in consumer’s homes or worse, ending up in the landfill. The delicate circular economy of the manufacture of cardboard boxes collapsed.
The impact of eCommerce on box supply
And so started the next chain of events
Non-essential shops were closed. With consumers afraid to go out and visit even essential shops such as supermarkets – the UK took to buying online. People who had never shopped online before were forced to do so. Consumers were panic buying ahead of Brexit and after seeing the shelves stripped bare in supermarkets. A year ago, retailers were predicting that the way we shop could change forever as 33% more of us switched to getting our groceries delivered at home. By August of last year, three-quarters of us were doing the weekly food shop online.
Online retailers were also stockpiling cardboard boxes out of their own concerns about supply, Brexit and border disruptions. Businesses such as pubs, breweries, garden centres, flower growers and nurseries and charities all had to suddenly pivot their businesses online to survive. And what did they all need? Cardboard boxes!
Demand continued to grow, reaching record levels of online purchasing with an increase of over 74% – pushing box supply into further scarcity. There were winners and also losers and if you were a retailer in the home and garden space, the only issue was being able to keep up with demand! The Royal Mail reported that there were over 200 million extra parcels processed through their courier networks in 2020 alone.
Cardboard supply in 2021
As we entered 2021, prices of old board had risen to £118 a tonne compared to £10 in January 2020. An article at the beginning of this year described the UK supply chain as “utterly overwhelmed” for corrugated board. At the same time, online retailers were being quoted double the normal cost to purchase their cardboard boxes and lead times being extended from a matter of days to two to three months.
In March this year, the Confederation of Paper Industries said that demand was 5 years ahead of pre-pandemic levels.
Simon Ellin, of the Recycling Association, stated the shortage was down to the “Amazon effect”. “There is a monumental increase in demand caused by the surge in online deliveries during the pandemic,” he said. “It’s a global shortage – not just the UK or EU – given huge demand from China. People are going around stealing cardboard.”
Current prices of old board are being reported at levels around £140.00 per tonne so the last few months are still showing strong price increases.
A look to the future with eCommerce and cardboard boxes
The mills and manufacturers we work with are continuing to talk of extremely difficult conditions. Mills have been operating non-stop with machinery running in continuous and additional shifts without planned and reactive maintenance. They are now being forced to stop in turn to carry out these essential works.
We are being told that we should be in no doubt that getting hold of paper in this second quarter of this year is going to be more difficult than at anytime before in this crisis. Here are the 4 current factors, some we have looked at already, that will continue to dictate price and supply:
- Mill downtime
- Cost of imported paper up by 40%
- Waste supply and prices
- Panic buying
Paper supply will continue to remain tight for the rest of 2021 – there is no doubt of this. We will have to all prepare for further increases in the very near future. Our best advice? Work closely with your supplier and continue to relentlessly monitor and manage your own supplies. You may have to make concessions such as using non-branded boxes or work with box sizes that aren’t your top choices. Investigating different void fill to make the most of different sized boxes may be worthwhile too. Make sure you look at your own forecasting and get orders into your suppliers as quickly as possible.
There is also no doubt that the UK’s love affair with eCommerce, born out of necessity from shopping restrictions due to Covid, will continue to grow. Last year, it was forecasted that we would spend £80,678 million in 2021 according to Statista so the struggle for cardboard boxes is definitely with us a while longer.
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