Industry Update: Cardboard Price Reaches New Heights
Back in February, cardboard prices hit an all-time high. According to the Producer Price Index from the U.S. Bureau of Labor Statistics, it’s value has risen 4% since December 2020.
What’s behind the growth?
It wouldn’t come as a surprise to anyone to hear that e-commerce has grown rapidly over the last year. Online sales accounted for an incredible 14% of total retail sales in Q4 of 2020. In fact, it’s already surpassed levels it wasn’t expected to reach until the year 2025. This year, experts predict e-commence will bring in about $843 billion in sales. (ROI Revolution)
With people ordering products online at a higher rate and frequency than ever before, there has been a huge surge in the demand for corrugated and solid fiber boxes. But that’s not the only factor driving up pricing.
Beyond the rise of e-commerce, another significant factor driving up cardboard box demand is the housing market boom. Inventory is at record-lows, along with interest rates, while demand has skyrocketed. When people purchase homes, they need cardboard boxes, and thus, demand rises. Back in January, Packaging Corporation of America Executive Vice President Corrugated Products Tom Hassfurther said the following:
“We’re also seeing obviously the big trends in people moving away from cities, buying homes, when you buy homes, there’s a lot of things that go into those homes that are associated with corrugated boxes.”
Hassfurther also cited the move in consumer purchasing trends away from plastic and towards paper products. With all of these components are in “growth mode”, he believes demand is sustainability and will continue in an upward direction.
In addition, the following factors are increasing the demand for cardboard
• Most consumer segments growing in the fourth quarter of 2020
• Demand from restaurants for take out packaging
• Increased demand from China as their economy rebounds
There’s never been a better return on your baled cardboard than right now. Packaging giant Sonoco’s VP and CFO, Julie Albrecht, explained that OCC (old corrugated containers) prices “averaged $71 per ton throughout 2020, and that the company anticipates OCC will increase to average about $90 per ton this year.” This has been a drastic change since 2019, when the average pricing was at record lows. Now, it’s jumped around 196% nationally.
Further points as to why the price of cardboard will continue to rise
• Continued increased demand both nationally and globaly
• Growing inflation
• Growing transport costs
Be sure to this extra revenue stream for your organization running optimally by having regular service and maintenance appointment. Or take the time to start a recycling program if you don’t have one in place. You’ll be both helping the environment and increase cash flow. Contact PTR to learn more.