Strong demand, rising costs affect packaging strategies

STRONG DEMAND FUELS NEW STRATEGIES

Shipments of corrugated materials hit a record high in 2020, reaching 407 billion square feet of volume, a 3.5% increase over 2019’s 405 billion square feet (which was also the previous record), according to data from the Fibre Box Association (FBA), a trade group representing manufacturers of corrugated products. The industry had been experiencing steady growth since the 2009 recession, when shipments dipped to 345 billion square feet, says Rachel Kenyon, FBA senior vice president.

“There are a couple of reasons we believe we had record growth [in 2020],” she explains, pointing to a steady rise in e-commerce activity over the past several years as a contributing factor. “But that’s not enough to move the needle on corrugated packaging. Last year, when things shut down, you saw even greater growth in e-commerce, and that’s when you really saw the industry start to pick back up.”

Strong e-commerce sales eliminated the tapering of volume the industry typically sees at the end of the year, she says. And following a slight dip in January, corrugated shipments resumed their climb, reaching historic highs this spring, she adds.

All of this is contributing to a sharper focus on packaging in general, according to Blake. The shift from brick-and-mortar to online sales was already forcing companies to examine their packaging protocols, especially when it comes to the last mile. But Blake says the past year has created an opportunity for them to ramp up those efforts and develop packaging processes that best fit the application.

“One of the greatest challenges is the vast variety of fulfillment options. We have [everything] from traditional brick-and-mortar to growth in discounters to e-commerce,” he explains. “All of these different routes to the market, to the consumer, have different packaging requirements, and that creates complexity in the supply chain.”

Product protection is at the heart of the issue. In traditional retail, products are shipped on pallets, where they are protected until the pallets are broken down at the store and the items placed on shelves, with the consumer taking responsibility for safe delivery. E-commerce and direct-to-consumer shipping has changed all that, leaving brands with the responsibility of packaging individual items for safe delivery from the warehouse, distribution center, or retail store through the final mile to the customer’s door. Most brands’ answer to that problem is to add extra packaging to safeguard the items during the journey. But those strategies are changing in light of rising costs and environmental concerns.

“With e-commerce, there’s always been the practice of using more packaging to help [the merchandise] survive the journey. But there is [growing pressure] on companies to reduce the amount of packaging used or work toward making sure what they’re using is curbside recyclable,” Blake explains. “There are a lot of areas where optimizing packaging drives a financial benefit.”