Online shopping boom drives up demand for cardboard in the US

During the pandemic, Americans who stayed home increasingly shopped online, leading to unprecedented demand for corrugated cardboard. Now that online shopping continues to grow and the number of express packages is steadily increasing, concerns are growing that manufacturers may soon face a shortage of cardboard.

International Paper, a major U.S. paper company, is also dealing with a supply crunch, with CEO Mark Sutton saying in an April earnings call : “Inventories of containerboard and corrugated board are lower than we would have liked.”

At the end of March, The Wall Street Journal reported that containerboard prices were rising and suppliers had warned customers to expect the trend to continue. So far in 2021, trade publication Pulp Paper News reported that "global pulp prices rose 30% in the first three months of the year."

In addition to demand, winter storms in the southern U.S. caused International Paper to lose 145,000 tons of cardboard production. "Operations and costs include an impact of approximately $55 million from the winter storms," ​​Sutton told analysts on an earnings call in late April .

Yahoo Finance says Amazon is a large supplier, with International Paper supplying about half of the boxes used by the tech giant in 2017. An Amazon spokesperson did not immediately respond to a request for comment on its cardboard supply.

The "Amazon effect" is one reason for the UK's cardboard shortage, with many small business owners in the country saying they have been squeezed out of the market by the e-commerce giant, according to the Financial Times .

Find alternatives to cardboard packaging and invest in packaging that’s the right size

“ Due to the scarcity of paperboard , some retailers are looking for plastic alternatives to paperboard packaging,” Daniel Nordigarden , a partner in McKinsey & Company’s packaging service line , told Supply Management magazine in March. But he and other industry players don’t expect demand for plastics to continue, only until the supply chain stabilizes and companies can build up inventories of what SM calls “beige gold.”

Terry Webber, executive director of packaging at the American Forest & Paper Association, said in a statement that when the pandemic hit the U.S., "containerboard production in March was 9% higher than in March 2020." He also mentioned that boxes are the most recycled packaging in the U.S. and can help keep the supply chain sustainable for retailers and customers.

According to Ryan, International Paper’s solution to this problem is to invest in “right-sized” packaging. Using the company’s eBos service platform, designers and analysts run an algorithm to determine the most efficient styles for shipping packaging.

Online Shopping

E-commerce

USA