If you’re an avid internet shopper or even a business buying packaging in bulk, it’s no secret that the price of cardboard in the UK has been rising since around October 2020. As with any industry, when demand outweighs supply, the cost of the commodity increases. In simple terms, this is exactly what has happened with the UK cardboard market and why cardboard boxes have become more expensive and exclusive over the past year or so.
Cardboard use has skyrocketed for a number of reasons; e-commerce growth, Brexit, poor recycling habits and society as a whole becoming more conscious about using eco-friendly products. These factors have all lead to a nationwide cardboard shortage. We discuss these reasons in a little more detail below.
Exponential growth in E-commerce
E-commerce sales increased significantly over the course of 2020, with most months exceeding the typical Christmas rush. Month long lock-downs and shop closures meant more people turned to shopping online and companies which would typically serve in-store were forced to sell online to survive.
Royal Mail themselves reported an extra 200 million parcels sent in 2020. This increase in parcels spiked the requirement for packaging to ship items to customers, therefore a significant increase in the usage of cardboard boxes, mailers and all most other things packaging!
As most items were now being shipped to customers individually, it increased the overall packaging requirement for most individual goods. When shipping items to a store, it’s usually in large boxes, containing large quantities of items. The lack of retail shops meant that each item then had to be individually wrapped to be sent to customers directly, accelerating the use of cardboard and the impact of the cardboard shortage even more.
Brexit, alongside the pandemic has caused border disruption at many of the UK’s ports. This affects the UK cardboard market for a number of reasons:
Containership prices are at an all-time high, as again demand is exceeding supply. The slow-down of the world’s economy during 2020 created a boost in international trade as businesses scrambled to gain back what was lost during their months of closure. Some UK suppliers choose to import their cardboard from China, or the Middle East but the high containership prices meant it was now cheaper to buy nationally, creating a higher demand for the UK’s cardboard supply.
The second influencing factor was the high levels of speculation and uncertainty regarding Brexit. With the potential impact of leaving the European Union totally unknown, many distributors chose to stockpile their cardboard products to ensure they were ahead of the game in an already sought-after industry.
In the UK, we consume around 9.9 million tonnes of paper per year, of which approximately 80% is recycled1 and fed back into making new products. This large percentage makes recycling an imperative element in keeping our paper stocks at or above the rate of consumption.
Toward the end of 2020, the recycling sector in the UK was hit by the ‘pingdemic’, which took many industries by storm. Because of this, a significant portion of staff who work in the recycling sector were forced to self-isolate, whether from COVID-19 itself, or from being in contact with somebody infected with the virus. This, coupled with the postponement of services for the Christmas period meant that we were around 8 weeks behind in collecting recycled waste.
Without people to collect the board, the recycling sector took a huge hit. This left us not only with a minimal supply of raw materials, but also a very limited supply of recyclable materials, accelerating the cardboard shortage even more.
Increase in Eco-Conscious buyers
Many UK consumers have become more aware of the impact in which their packaging choices can have on the environment. This change in mindset has created a higher demand for more eco-friendly products and a shift away from plastic and other non-renewable resources. Cardboard can serve as a strong, environmentally sound, multi-purpose alternative for many packaging materials with bubble wrap being swapped for corrugated cardboard and mailing bags swapped for book wrap boxes.
We’ve worked hard this year to ensure many of our products have a positive eco-score, but there aren’t many out there which don’t contain cardboard in some fashion!
What impact is the shortage causing?
The impact of the cardboard shortage is having a significant impact on almost all supply chains with two main elements causing the disruption; lack of availability and price increases.
Cardboard is used in most industries and more often than you think. Your toothpaste, pens and vacuum all come packaged in a cardboard box by the manufacturer. With the rise of e-commerce, these are often repackaged in cardboard again to ensure protection in transit.
Aside from just the cardboard element, it’s important to look at the other products which are made from the same raw material – wood. Pallets, cardboard, beams and garden sheds are all made from wood, so the supply chain shortage also means that their supply is limited. Despite the many benefits and uses of wood, it creates a much larger societal impact when it is used so diversely as everybody is fighting for the same product!
Although the market has settled slightly since November 2020, businesses are often having to endure longer lead-times for their packaging, whilst also paying a premium due to the growing price increases. The packaging industry as a whole has taken a huge hit, with some lead-times for certain products exceeding the 12-month mark. Larger companies such as Amazon have ‘booked’ slots in production for months to come, meaning less availability and higher prices for smaller businesses when the time comes to order new stock.
Is the situation improving?
Sadly the packaging market in the UK is still seeing a cardboard shortage, and price increases are continuing on an almost-monthly basis. The need for cardboard, and cardboard packaging is still much higher than the rate at which it can be produced. As with any commodity when supply can’t meet demand, the price continues to increase until this balance is met.
As we go into the busy Christmas period, it’s expected that the supply-chain shortages may become worse, and lead-times stretched to an all-time high. We’re hoping that as we go into 2022, the paper market will have rebalanced itself, and prices should begin to fall steadily as the paper mills become better at sourcing materials and managing their workload.
What are Schott Packaging doing to combat the cardboard crisis?
As you might have seen on our website, we’re pretty big on ensuring we do our bit for the environment and a major part of our sustainability programme includes recycling. As one of the UK’s largest packaging suppliers for cardboard boxes, we’re often left with a lot of spare board; from damaged boxes or extra cardboard that arrives on a pallet. We’ve got a 35-yard container outside our warehouse which we fill with unusable or spare cardboard, and this is sent to a local Recycling Centre, just around the corner from us.
We’re also planting trees on a monthly basis, with 1900 trees in our forest at present. By planting trees, we’re ensuring that we put back what we take out from the cardboard market and also offset any carbon emissions whilst doing so.
Most eco-packaging is made from cardboard and it’s often difficult to find an alternative with the same ecological footprint. We’re always on the hunt for something eco and a little quirky, so we’ve sourced some Arofol branded Grass Padded Bubble Envelopes. Grass is another fast-growing, renewable and sustainable raw material which doesn’t contribute to the cardboard shortage we’re experiencing currently.
1 – https://www.recyclingbins.co.uk/recycling-facts/