Navigating Price Changes in the Corrugated Industry
Within the last year the corrugated industry has experienced tremendous growth, and with that, challenges, largely contributed to navigating the Covid-19 pandemic, along with the explosion of eCommerce retail. As a result, price increases have been experienced across the industry. Throughout this time, we have faced complete business shutdowns, shifts in demand, and two recent price increases from Pulp and Paper within the last 5 months. Additionally, the industry reached its highest valuation of all time at $252.16 billion for 2020, and is expected to reach $336.61 billion by 2026, showing continued growth at a CAGR of 4.7%. (Corrugated & Paperboard Boxes Market Report)
We recently had the good fortune to catch up with Ryan Fox at Green Markets, A Bloomberg Company, to discuss the paper packaging industry and his insights from this last year. When asked about the latest price increases, having two within a relatively short span, and if this is unique to our industry, Ryan commented, “It’s definitely happened before. Just in the last ten years, we had multiple increases in 2009-2010, 2012-2013, and 2017-2018, all within 6-8 months of each other. Their magnitude was not quite as high, but nonetheless they still happened, so not unique as a whole. On some level there needs to be adjustment for inflation that has not happened over the last 2.5 years, especially when supply is so limited, compared to demand. The circumstances we’re in…are similar to every other commodity around packaging, which are being hit as hard.”
Recent increases are not unique to corrugated, particularly over the past several months. “You’re seeing the same thing in plastics, lumber, and even across all commodities,” said Ryan. There are many contributing factors to the recent price increases and manufacturers, like Rusken, are working with our partners to navigate collectively through these times.
When asked about driving forces of the recent increases and supply constraints, particularly with the eCommerce boom, Ryan added, “We had an almost perfect storm last year. Covid-19 hit at a time when the industry is taking a down time and businesses are shut down, including paper mills. In June and July, things are picking up and by August, it was already too late. eCommerce grew more from March through June, than in the previous 10 years combined. That big shift, it was felt. Ultimately, the industry outlook was highest of all time, but wasn’t as drastic as you might think.” A combination of shutdowns and re-openings, eCommerce rapid growth, and labor shortages have all created a series of challenges with maintaining supply in our industry and throughout the country.
Lastly, when discussing ways corrugated manufacturers are working to offset recent price increases with their partners, Ryan stated, “Innovation is always where true cost savings come in. For example, if you are looking at customer-centric savings, looking at how can you either lightweight or change flute structures with soft savings. Re-negotiating box structures, flute sizes, going to one-pass, and applying innovation is a great place to start.”
At Rusken, we are here to help navigate through these challenging times together. Below are ways we can collaborate to help offset recent price increases and continue to innovate moving forward.
- By increasing quantities per order, prices per unit will decrease, without adding additional labor or resources
- Just-In-Time (JIT) Warehousing options available to accommodate increased volume orders
- Higher efficiency per run
- Right-Size your packaging to limit waste and reduce space and freight costs
- Revisit flute structures, cutting unnecessary weight and materials, fitting more per truckload
- SKU consolidation and simplification
- Site visits to analyze packaging operations and find gaps for savings
- Finishing and Assembly Capabilities to remove steps from your team and limit additional materials
- Enhancing production efficiencies and runs
We greatly thank Ryan Fox for his time and valuable insight into the corrugated industry considering the unforeseen challenges experienced over this past year. The Rusken team is here to work with you in navigating these challenges and uncover opportunities that make sense for your operations.
Reach out to our team today to learn more and work with our dedicated packaging professionals.
About Rusken: Rusken is a dynamic, modern integrated packaging company with locations throughout the Southeast United States. With fourteen (14) facilities in seven (7) states, Rusken is a forward-looking regional organization. Headquartered in Cullman, Alabama, Rusken has experienced exponential growth over the last decade. This success is driven by an entrepreneurial spirit, focus on family-based values and a commitment to a truly remarkable customer experience. From standard corrugated boxes to highly customized packaging solutions that require robust design-work, colorful printing and hand finishing, the good people behind the Rusken name are passionate about quality, delivery and customer smiles.