Suggestions for Judging Price Values Relative to Corrugated in 2020s

 

 

Prices for corrugated boxes have been increasing at an estimated annualized rate of 6.8% in the three years to 2018, hurting buyer power. While rising demand has afforded suppliers the leverage to raise prices, shifts in their overall production costs have largely been responsible for the price increase. 

Seeking quasi-gains (not metaphorically shifting the rows and columns to represent a 0 sum change; rather, a quasi-gain is real though not earned through any work or merit. It shifts overall production costs increases overnight / single batch to the consumer thus forcing a "full & immediate acceptance" tax on customers so as to avoid increasing prices within the operation itself as an unscrupulous supplier may rather have customers instantly compensate for the price changes, possibly leading to a gain in assets related to this process for manufacturers who are not compensating for increasing living costs that may vary in rate, but in any functional market including recessions is at least stable and when this process is maintained, eventually the customer-base is now being shifted considerable extra costs to pay for increases in operating expenses (for commercial and industrial buildings that will often face price increases).

 

The top suppliers of corrugated boxes typically institute price hikes every two to three years. Many of these suppliers are due after price hikes during the first apparent economic numbers in late 2015 and early 2016 that would have motivated suppliers to take advantage of higher levels of additional consumer spending and new converters borrowing.

 

Corrugated Boxes - Total Cost of Ownership 

The total cost of ownership for corrugated boxes is low. Corrugated boxes are commoditized products that require limited product research because the difference in quality from one supplier to another is minimal. Furthermore, there are numerous distributors of corrugated boxes, which also eases the research process. Depending on the required functionality of the box, buyers may need to procure.

By 2015 an impressive 92.9% of corrugated cardboard produced was recovered for recycling. The paper industry calls these collected boxes Old Corrugated Containers, or OCC for short. OCC are broken down and turned into linerboard — the paper used to make corrugated board, which is then turned into boxes. The downside of such a sustainable process is that each piece is wholly dependent on the others. When something throws off the status quo, everything shifts.

 

Apr. 2017 - $715

Oct. 2016 - $665

Jan. 2016 - $615

Apr. 2013 - $630

Jan. 2013 - $580

The first trigger for increasing OCC costs is higher demand for boxes. The use of e-commerce boxes alone is predicted to increase at least 10% per year through 2020. This growth puts pressure on the OCC market because the same amount of recycled material has to support increased production until the cycle can catch up. This will continue until more OCC becomes available via higher production, or incentivized recovery and recycle rates.

 

Source for data: ProcurementIQ (Los Angeles, Cali., USA) Dec. 2018