- The price of cardboard reached a record high in February, according to the Producer Price Index for corrugated and solid fiber box manufacturing from the U.S. Bureau of Labor Statistics (BLS). The rising prices indicate e-commerce demand is leading to higher costs for packaging materials.
- The index has increased more than 4% since December 2020 and is up the same amount year-over-year, according to the BLS figures.
- Corrugated industry shipments were up 3.4% year-over-year in 2020 to reach a total 407 billion square feet, according to figures emailed by the Fibre Box Association.
Cardboard prices reach record highs
The uptick in demand and prices for cardboard comes at a time when e-commerce sales have boomed, reaching 14% of total retail sales in the fourth quarter of 2020, according to the latest figures from the U.S. Census Bureau.
Corrugated boxes have been listed as a commodity that is in short supply with rising prices for the last five months on the Institute for Supply Management's manufacturing report.
"Just about every consumer segment accelerated in the fourth quarter. We continue to see strong double-digit growth in e-commerce, and we believe the vast majority of e-commerce adoption is permanent," International Paper CFO Tim Nicholls said in February.
International Paper said its orders were starting to pile up as it ran on lean inventory throughout 2020.
"We've got long backlogs, extended backlogs in the export channel," International Paper Chair and CEO Mark Sutton said. "As we mentioned, we've been pivoting and prioritizing that to the North American market through our Integrated system."
North American box shipments were up 6% year-over-year quarter to date for WestRock, according to slides the company presented at the beginning of last month at an analyst conference.
WestRock's percentage of sales from packaging reached 73% in 2020, a 5% increase compared to 2019, according to the company's most recent earnings.
"The growth in packaging was driven by higher e-commerce demand, strong industrial shipments including our Victory distribution channel, as well as growth across our food, beverage, beauty and health care markets with customers further utilizing our innovative solutions," WestRock CEO Steve Voorhees said.
E-commerce is not the only trend driving box sales. Home buying is also leading to box sales, Packaging Corporation of America Executive Vice President Corrugated Products Tom Hassfurther said earlier this year.
"Obviously, [it's] no surprise e-commerce is growing at a faster rate than those other segments, but they’re all in growth mode, which is great, which also, I think signals very clearly that this demand is strong across the board and sustainable going forward," Hassfurther said.
This story was first published in our weekly newsletter, Supply Chain Dive: Operations. Sign up here.