Packaging and retail businesses have been hit hard lately due to a shortage of cardboard available for packing and posting, and recently there’s been more bad news with the announcement that prices for recycled cardboard that have risen consistently since last summer will continue to rise in 2021.
The shortage of packaging materials and including the widely adopted corrugated cardboard used in the production of boxes has been caused by a combination of disruptive factors, all happening at around the same time. These include:
The rise in online sales
With the rise of UK online retail sales, the value in 2020 is estimated to reach £100bn.
Data published in 2019 by the ONS, looking at the previous 10 years revealed how online shopping in the UK has been steadily gaining ground compared to shopping in stores, with the proportion of online spending increasing threefold between 2008 (4.9%) and 2018 (17.9%). Then with the onset of Covid-19, lockdown and the fact that internet usage in the UK is now at an all-time high, it is estimated that the value of online sales will reach just below a staggering £100bn for 2020. These figures demonstrate how the pandemic and subsequent lockdowns have shifted the way we shop, and in turn are triggering changes in consumer buying behaviour that are likely to have long lasting effects, including the higher demand for packaging materials.
The increase in the number of parcels delivered
There were an estimated 200 million extra parcels delivered during the Christmas period in the UK in 2020.
With the acceleration of online shopping and consequently resulting in an increasing number of items either being sent by post or being delivered by courier; this has had a huge impact on the demand for packaging materials – particularly for corrugated cardboard used to pack the huge variety of items that consumers may have otherwise picked up personally in store. These purchases are wide ranging and include large bulky items such as bikes, sports equipment, and toys, right through to smaller breakable products like bottles of perfume and beer!
The Brexit deadline causing companies to stockpile
Many retailers and suppliers stockpiled goods and packing materials at the end of 2020 around the Brexit deadline because of the uncertainty around the Brexit deal. Then once the deadline had passed and the UK entered the new post EU era there were then significant delays with moving goods and packaging materials around and with transporting them to their final destinations in the UK.
Also adding to the shortage of cardboard in the UK is the lack of pulp used to make paper products and which is usually readily available, logistics and staffing issues caused by the coronavirus pandemic, global businesses using their buying power to obtain huge amounts of packaging stock and related materials and the unprecedented demand for products from consumers from other countries.
The Confederation of Paper Industries (CPI) also confirmed the complex reasons for the shortage of cardboard used for packing with a recent statement where they explained that ‘there is always a peak in demand for paper and packaging items in the run up to Christmas, but at the end of 2020 and at the beginning of 2021, stockpiling cardboard materials around the Brexit deadline and complications with shipping and staffing challenges caused by Covid-19 exacerbated the problems experienced in the UK and globally.’
So, what’s in store for cardboard packaging in 2021?
Corrugated cardboard is currently the world’s most used material for transport packing and the most common type of packaging material offering numerous possibilities for packaging to accommodate the different sizes, shapes and strengths needed to satisfy the surge in online sales.
As is often the case when there’s either a product shortage or the demand is high – costs increase. With the cost of just about everything seeming to rise at the moment, from groceries to clothes, from petrol to stationery, unfortunately packaging materials like cardboard are not exempt.
Although price hikes are never welcome, there are several ways for retailers to beat the increase in cardboard costs such as:
- Temporarily switching to an alternative packing material
- Planning ahead for seasonal fluctuations
- Taking advantage of discounts by buying in bulk
- Incentivising customers to recycle & return packing materials
In addition to this, some packaging suppliers are also warning customers to place their orders for 2021 earlier than usual which should help avoid some of the price rises and avoid stock shortages.