As a result of global paper & resin shortages, recent events affecting the Texas manufacturing market, freight increases, and ongoing COVID-related events in the country, we’ve seen unpreceded price increases over the last 60 days. Prices globally continue to increase, with many manufacturers enforcing force majeure, whereby even written contracts have been canceled and allocations have begun.
COVID-19 Drives E-Commerce Growth (and corrugated prices)
The global pandemic has driven e-commerce growth to record levels. Consumers spent $861.2 billion online with U.S. merchants in 2020, up an incredible 44% year-over-year, according to Digital Commerce 360 estimates. That’s the highest annual U.S e-commerce growth in at least two decades and is nearly triple the 15.1% jump in 2019.
As a result, the demand for corrugated packaging and manufacturers’ backlogs for corrugated boxes are at record levels. Today’s prices for what is now being called “beige gold” reflect that, with even higher price levels being anticipated as e-commerce demands increase.
Creative Solutions That Uncover Savings
Knowing the problem is one thing; identifying solutions is another. At Korpack, we’ve always believed that we’re our customer’s partner, that two heads are better than one.
Let’s look at some things we can do together to work through the supply and pricing challenges
1. Right-Size Your Boxes
Move from stock boxes to custom sizes. Many companies have the perception that custom runs are more expensive when in reality, custom boxes use less material and reduce costs because they’re built to fit your product perfectly. If you use more than a pallet of a specific size in 30-60 days, a custom run can deliver cost-savings for you.
2. Increase Your Order Volume
Increase your run quantity to save on per-box cost. Box runs have a flat machine setup cost associated with each run. When you increase your run size, you increase the number of boxes over which that flat setup cost is spread, which reduces the overall per-box cost of your run. Since corrugated material is purchased by square feet, the higher the square footage of your order, the lower the material price is.
3. Improve Your Board Grade
Look at changing board grade combinations. There are 19 different combinations of corrugated material. In there, you’ll probably find a handful of solutions that can save you money while still providing great performance and protection.
4. Machine Automation
Customized automation solutions can help you achieve both growth and savings. By increasing your volume and output, you’ll be decreasing costs per order without additional labor.
5. Re-design for Material Efficiency
Products are often over-protected using too much material; we can take a fresh look at a new solution. Making a style change can significantly reduce the cost of a box or the labor involved in assembly and pack-out.
6. Long-term Inventory Stocking
Korpack can help with inventory management. One of the services our customer’s value is on-demand warehouse space for their products. Our expert inventory management services help our customers increase efficiency, reduce waste, and keep costs low.
While price increases can be challenging, they can also drive improvement and innovation to your current packaging methods and produce overall positive outcomes. Contact us today to schedule a product review and/or a plant audit.
