Save Money on Your Shipping Boxes During the 2024 Cardboard Price Increase
The drumroll for price hikes began in early December, with implementation either slated for January 1st or deferred to February 1st.
The initial wave of notable price bumps hit linerboard customers, marking the first significant increase in nearly two years for this segment. Leading the charge were five out of the six largest North American containerboard and corrugated box companies: International Paper, WestRock, Packaging Corporation of America, Pratt Industries, and Cascades. They announced nearly identical price hikes ranging from $70 to $75 per ton, effective from January 1st. Together, these giants command almost 70% of North American containerboard capacity.
Following suit through December and January were other companies, such as Graphic Packaging International, Greif, Ox Industries, and Sonoco, with similar price upticks across various grades, typically amounting to a 7% to 16% increase. The rationale behind these moves was largely attributed to escalating input costs for raw materials, transportation, energy, and labor.
Following recent market movements reported by Pulp/Paper Week on February 16th, which confirmed a $40/ton increase on 42-lb unbleached linerboard and a $60/ton increase on 26-lb corrugating medium many suppliers announced a 12% increase in corrugated prices effective April 1st, 2024. This adjustment is in response to the upward trajectory of commodity market prices, reflecting escalating costs attributed to raw materials, market volatility, constrained capacities, and rising transportation expenses.
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However, some industry observers criticized the timing of these hikes, particularly in the context of recent downturns in the fiber packaging sector. Myles Cohen, founder of Circular Ventures and former Pratt Recycling president, labeled it a "very poor environment" for corrugated box price hikes, citing two consecutive years of negative growth in the box business.
An analysis by Fastmarkets RISI published on December 5th dubbed the wave of price hikes "shocking" and "bold," raising questions among market participants. The report highlighted a sentiment among buyers that raising prices at this juncture seemed oddly timed, hinting at potential ulterior motives by fiber packaging companies to sway market dynamics amidst ongoing declines.
Traditionally, price increases are more commonly associated with periods of high demand. However, market indicators at the time did not suggest a tight market. In fact, box shipments had been on a downward trajectory, with containerboard mills operating at only 85% of their capacity. Ryan Fox, a corrugated packaging market analyst at Bloomberg Intelligence, emphasized the oversupply of paper, indicating that competitiveness hinges on keeping prices down.
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Despite glimmers of optimism about potential upticks in box demand and manufacturing revenues, recent data showed continued contraction in manufacturing and flat prices for containerboard and boxboard in January. This raised doubts about the sustainability of the price increases, with some analysts suggesting that customers might reject or negotiate smaller increases, especially if they have alternative suppliers or contractual flexibility.
The situation is further complicated by factors such as excess capacity in containerboard production, uncertainty surrounding consumer spending patterns amid inflation, and differing perspectives on demand trends. While some anticipate partial increases, others remain skeptical about the prospects of the hikes sticking in the face of challenging market conditions.
In essence, the fiber packaging industry finds itself at a crossroads, navigating a complex interplay of supply, demand, pricing dynamics, and broader economic factors, with the outcome of the price increases remaining uncertain.Â
Amidst the uncertainties surrounding the recent price hikes in the fiber packaging industry, one aspect remains clear: CustomBoxes.io's ability to maintain affordability for standard sizes is a testament to the collective volume of thousands of small businesses opting for standard sizes over special orders. By leveraging this collective volume, we can mitigate the impact of price fluctuations and ensure that standard sizes remain accessible and cost-effective for our customers. This strategic approach not only supports small businesses in managing their packaging costs but also underscores the value of collaboration and collective action in navigating market challenges.Â
Alongside these industry shifts, the cost of blank boxes with Uline has also risen, adding further pressure on small businesses to reconsider their packaging strategies. With prices on the rise across the board, there's a growing imperative for small businesses to maximize return on investment by investing in branded shipping boxes that also serve as valuable marketing assets. While the temptation to opt for cheaper, blank boxes may persist, the added costs underscore the importance of prioritizing value and brand representation in packaging decisions. As businesses strive to navigate these evolving dynamics, leveraging branded shipping boxes becomes not just a branding opportunity but a strategic investment in enhancing customer experience and driving long-term business growth.
At CustomBoxes.io, investing in branding and print upgrades can yield significant returns, with reports suggesting an increase in repeat sales of 3% or more, effectively offsetting cost rises and enhancing your bottom line. Many of our customers have experienced repeat sales growth of over 10% by leveraging these upgrades and additional branding opportunities.
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Averages are the weighted cost of four popular sizes, 6x6x6, 8x8x8, 10x10x10 and 12x12x12 32ECT.
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