National media reports of a cardboard box shortage are being seen mainly as a sign of booming demand from smaller scale entrepreneurs.
Since the start of the Covid-19 pandemic in March 2020, use of cardboard boxes has soared led mainly by delivery services including Amazon as well as the health sector. However, with the closure of pubs and parts of the retail sector during lockdowns, many businesses are also turning to mail order when in the past this was only a small part of their business, or is something completely new for them.
Entrepreneurs
Recycling experts put this increased demand for boxes from ‘entrepreneurs’ as one of a number of factors currently putting pressure on the finished box market and causing price rises for used cardboard (OCC or old KLS) and mixed papers which are used to make the box material.
“There is obvious demand from the supply chain for new boxes”
Simon Weston
Confederation of Paper Industries
Simon Weston, director of raw materials at the Swindon-based Confederation of Paper Industries, told letsrecycle.com he considered there was a “tight supply on boxes, partly down to entrepreneurs wanting to boxes and struggling to get them. I don’t believe there is any immediate shortage of raw materials [used cardboard] for the packaging mills but there is obvious demand from the supply chain for new boxes.”
Mr Weston said that he thought the impact of Covid-19 on the papermaking sector was limited but there might a small loss of labour in the boxmaking companies. And, he noted that some products, such as kraftliner to strengthen boxes as well as reels of material, are imported.
‘Perfect storm’
“There is no one factor behind this shortage”
Simon Ellin
Recycling Association
Simon Ellin, chief executive of the Recycling Association, told letsrecycle.com that the situation was a “perfect storm”. He commented: “There is no one factor behind this shortage which is mainly about a huge demand for cardboard fuelled by home deliveries. There was a big demand pre-Christmas and then add in shipping problems and some staff absences and delays at graphics labelling for boxes and it is not surprising to see delays for some customers.”
And, Dr Ellin said that prices for cardboard are rising, with Europe looking for more material and also that “Asia is hungry for material”. He predicted that fibre shortages could be seen again and that while tonnages would be needed by the domestic mills, it should be remembered that the UK is “utterly dependent on export markets” because it generates more used cardboard than needed by UK mills to make new material.
Global lockdown
One paper sector expert said that he believed that the shortage of boxes in the UK was “reflecting to a degree a global lockdown”.
With restaurants closed, food deliveries such as from Dishoom are using boxes for food despatch
Speaking to letsrecycle.com, he said: “People are shopping so much more on line not only because shops are closed but also many people have more money to spend because their holidays are cancelled, they are not going to watch sport or theatre and so are spending it on goods, all of which come in one or two cardboard boxes.”
Residual waste
He expressed concern that not all the cardboard which could be collected from homes was actually getting collected. “Some council systems are just not designed to collect extra cardboard especially when you have a box to put your recycling in. I’m worried that we are losing cardboard to waste bins and booking systems at HWRCs, put people off from going to them and so also put extra cardboard out with their rubbish.”
Another paper sector observer commented that there would be a challenge in supplying smaller and in particular new customers with boxes. “The box suppliers will have to service their long-standing customers so newer businesses could find they have a problem – it will be harder for the little guy. Some box material will come in from Europe but this could be delayed by the port problems caused by Brexit and the fact that there is good demand for boxes in Germany and France too.”
The demand for boxes in the UK will keep mills busy in producing new material. However, they are limited in supplying extra material as they generally run 52 weeks a year, seven days a week apart from maintenance shutdowns so are fully utilised.
Prices
On the pricing front, there are expectations that the value of used cardboard and mixed papers will keep rising steadily rather than shooting up. Part of the cause is that virgin pulp prices are also rising. One merchant remarked that all the talk of a shortage of boxes could encourage ‘white van man’ into the marketplace to steal bales of cardboard from the back of shops.
There is some concern that reports of box demand could lead to thefts of material from the back of smaller stores
Questions are being asked however, as to how the situation will change once lockdowns end in Europe, potentially over the summer and whether then there will be a sudden fall in home shopping causing a downturn in prices.
Export prices are also impacted by high shipping costs to south east Asia at present with shipping lines almost reluctant to take recycling material back. This is because there is strong European demand for products from China and nearby nations so that the shipping lines can charge heavily for moving goods to Europe.
However, there is also a big focus on China which, according to one observer, probably had not been expecting the demand for goods from the west so immediately after the pandemic and itself may become short of fibre as a consequence (see letsrecycle.com story).
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Source: letsrecycle.com Packaging
