Businesses have noticed that many types of cardboard used for packaging have recently become up to four times more expensive. The raw materials needed to make cardboard, such as cellulose, cost up to 60-80% more, which has obvious consequences for the entire eCommerce industry. The owners of online stores are feeling the effects of the increases and wondering when it’s going to end. Why have prices gone up so much? What are the alternatives to expensive cardboard boxes? Read on to learn more!
If you run an online store, you have certainly already felt the effect of increases in packaging prices. We'll tell you a bit more why this is so in a moment. We also have several noteworthy solutions that will allow you to minimize the effects of these increases.
Why are cardboard packaging more expensive?
Buyers of paper and cardboard were faced with sudden increases in the price of raw materials at the beginning of 2022, and more upheaval is on the way. Among others, the increases were announced by the large packaging manufacturer Sappi Europe, who announced that cardboard materials would become about 10-25% more expensive in the near future
Going back a bit further, compared to the beginning of 2021, cardboard prices have increased by 100%. That’s enough to get the attention of everyone involved, from manufacturers to distributors to end customers and everyone in between.
What is causing such a drastic increase in the price of cartons? First of all, there’s the pandemic that has disrupted the global supply of raw materials for the production of packaging and almost everything else. Paper mills around the world have had to deal with the same supply chain issues that have negatively impacted production facilities in every business sector with predictable results and that’s why cartons and other packing materials have really become an expensive commodity.
In the era of COVID-19, the eCommerce industry has also developed very rapidly, as consumers have moved their shopping habits online. As a result, the demand for packaging is also increasing since online retailers most often pack their products in cardboard boxes. This means the price of cardboard is being pushed in the wrong direction for consumers by both supply and demand issues at the same time.
How much more expensive will cardboard packaging get?
As already mentioned, cardboard prices have doubled since the beginning of 2021. The cost of cellulose itself has increased by 80%, and paper for cardboard production by 60%. This has translated into increases not only in cardboard boxes, but also in things like tissues, toilet paper, paper towels and other cellulose-based products.
The prices of cardboard packaging are rising at an alarming rate and many companies no longer ask about the prices of paper, but rather about whether it is available at all. Unfortunately for eCommerce, cardboard has become the most expensive of all paper products.
So is every online store owner doomed to deal with increased delivery costs? Not necessarily. We’ve put together three ways to help you deal with the skyrocketing prices of cardboard packaging. And while no single strategy will completely protect you against increases, applying the methods listed below will help you minimize the impact of these increases on your business.
3 Reliable Ways To Avoid Increasing Packaging Prices
REUSABLE PACKAGING
While they may not yet meet the needs of every item shipped to consumers in eCommerce, reusable packaging is an excellent option for soft goods like clothing. It’s also ideal for shipments between distribution centers and retail locations.
Logistics companies in multiple markets have launched their own campaigns to introduce reusable packaging, with benefits for everyone involved. A common scheme is to equip each package with an internal return label, which, when scanned in any pickup parcel locker, will enable the packaging to be returned to the logistics warehouse or back to a specific store, which will significantly reduce costs.
While still in its early stages, the campaign to make reusable packaging a bigger portion of all packing materials used could reduce overall use of cardboard by a factor of ten. Reusable packaging can easily return to circulation with no compromise in effectiveness or customer experience, satisfying all parties involved and helping the environment through the decreased need for more paper-based goods.
SECOND-HAND CARTON RECOVERY
The millions of boxes that are used just a single time present an obvious opportunity to cut the number of new boxes needed to meet the demands on eCommerce. Boxes of every kind and size are available in any place that sends and receives significant amounts of goods. In addition to conventional retail locations, you can find them in pharmacies, wholesalers, flower shops, restaurants and many other places. Just ask many sellers — they will be happy to get rid of excess packaging.
It is also worth browsing national and local advertising portals and even groups on Facebook to connect with local organizations that have packing materials that they would be glad to get rid of.
FULFILLMENT
The last option is a fulfillment partner, which is our specialty. Why might this solution be helpful? First of all, because thanks to the cooperation with many partners, we execute thousands of orders per month, which gives us access to preferential order conditions.
We place bulk orders for boxes and packaging accessories directly from the manufacturers, which means we can negotiate better rates than any single store. Also, we order a large part of the packaging well in advance, which allows us to maintain rates that are no longer available and ensures the availability of the goods.
Wojciech Wolski
Logistics Development Manager at Omnipack
None of this means that we are shielded from the changes in the market that we’ve already described. But thanks to cooperation with us, you still have access to packaging prices that are lower than the vast majority of offers available on the market today. We are also happy to work with partners and advise them on how to reduce the costs of packaging orders to a minimum.
At this point, we encourage you to read two articles on our blog:
Working with Omnipack means you not only have access to attractive packaging prices, but also enjoy the certainty of knowing that packing materials are available, which is not always the case when you’re on your own.
Remember that you can use the full capabilities of your logistics partner (allowing you to focus 100% on the sales and promotion of your online store) or only some parts of it, depending on your needs. Whatever you depend on your logistics partner for, fulfillment is one of the simplest and most effective ways to optimize all costs related to logistics.
If you would like to learn more about reliable access to packing materials or anything related to improving your logistics support, please contact us for details.
If you’ve had to ship anything during the last few months, you’ve most likely noticed the spike in prices. For many people, this has made restocking a nightmare. The cost of a single shipping container has risen dramatically in the last 18 months due to the coronavirus disrupting supply chains and trade routes. Route prices have increased sevenfold, if not more.
But why has the cost of shipping containers from China gotten so high?
The Reasons Behind The Spike In Shipping Container Cost
The main reason is, of course, the ongoing COVID 19 pandemic. In 2020, the epidemic impacted global supply networks, and shipping prices reflected this. With rates expected to remain at current levels until 2023, you should explore other avenues to restock to cut shipping expenses in the short run and keep your customers satisfied.
Another reason why shipping prices have surged is that there is a global shortage of shipping containers after the worldwide shutdown in COVID-19. China reopened its economy faster than the US and Europe. However, the shipping containers required by China to export produced goods were stranded in those two places. As a result, China faced a shipping container scarcity.
Triton International reported that the pandemic caused countless orders for new shipping containers to be canceled. Furthermore, Chinese manufacturers have only produced around three weeks' shipping containers. Container prices reflect this, with a massive increase from $1,800 per CEU to $3,500.
The merchant vessel Ever Given became stranded in the Suez Canal in March 2021, closing the canal for a week. This led shipping costs to skyrocket even further.
The Canal transports 12% of the world's trade, and the incident cost between $2.2 billion and $3.9 billion in lost international trade due to the delays.
Although the Canal is no longer obstructed, the delay caused by the closure caused shipping companies to be even more delayed in sending ships on their way to their destinations. Ports are already grappling with delays in berthing and dispatching cargo ships; further delays caused by situations like this put additional pressure on freight costs.
If that wasn’t enough, there was recently a spike in COVID cases in China, which slowed production even further due to lockdowns. This has also increased the wait time for vessels. Under normal circumstances, It would be half a day now; shipping takes 16 days.
The increase in shipping costs transportation impacts the price of products because it is an integral part of their production and distribution. Manufacturers must send both product parts, such as microchips and cotton, and product packaging. And once the goods have been packaged and bundled, they must be delivered to customers, whether through physical stores, online merchants, direct to businesses, or direct to consumers. Higher freight costs impact every area of the supply chain, including what companies must charge for goods to break even or profit. This could negatively affect customers as they may need to pay more for goods and services.
What Shipping Companies Can Do To Reduce Costs
Shipping Companies aren’t to blame for the rise in the cost of shipping containers, but there are some steps they can take to reduce the costs. Air freights deliver your goods faster, but it is also significantly more expensive than the ocean freight. However, because the cost of ocean shipping is at an all-time high, air freight may be a more cost-effective shipping choice for your company right now. Top clothing retailers such as Levi Strauss and Tommy Hilfiger use Airfreight to cut expenses.
China is the world's primary manufacturer, but it's currently facing constraints. The current situation serves as a reminder to shipping companies that they shouldn't place their eggs in one basket. Instead of relying on one China for all their manufacturing needs, they should have multiple sources to reduce risk.
Consider outsourcing your manufacturing to a country other than China, preferably one that is closer to your major markets. Vietnam is a potential manufacturing option to China, but you might even find suppliers in the US.
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