How the UK’s Cardboard Shortage Has Affected Cardboard Packaging Manufacturers

Corrugated cardboard packaging has always been at the centre of global demand and supply, playing a pivotal role in fulfilment. Until now, cardboard box packaging manufacturers have encountered few problems with production, but reality seems to have altered overnight. Currently, cardboard is now dubbed "beige gold", with the UK facing an unprecedented shortage in corrugated cardboard for packaging, causing a ripple effect throughout the business landscape. Below is a comprehensive analysis of the nature, origin, cause, and impact of the cardboard shortage situation.

The Cause of The UK’s Cardboard Shortage

Several factors account for the current corrugated cardboard packaging boxes' shortage being experienced by UK businesses. Some of the most famous culprits include:

Increase in Online Sales

E-commerce has undoubtedly enjoyed a significant boom in recent times. Experts estimate that online retail sales accounted for nearly one-third of all retail in the country in May 2020. The growing preference for online shopping caused a steady growth in the demand for corrugated cardboard for packaging over the last five years.

However, non-essential retail stores were forced to close for over thirty weeks, and consumers were left with little choice but to buy products online. Since almost everything is shipped to consumers in corrugated packaging, there has been a tremendous spike in the amount of packaging being used, especially during the Christmas period. To make matters worse, many of these boxes end up sitting in garages and homes, affecting the production of recycled cardboard packaging boxes.

Increased Home Dining and Drinking

As the Prime Minister warned against frequenting pubs and restaurants, and more people began to self-isolate, food delivery emerged as one of the few "winners" of the crisis period. Statista data indicates that 60% of 18-24 year-olds in Great Britain had increased food delivery usage due to COVID, with 40% of the 35-54-year-old demographic saying the same as of March 18, 2020.

Also, more food is being purchased for home consumption from supermarkets and restaurants (takeaway). Even businesses like breweries and vineyards have switched to online delivery to survive, and more cardboard packaging solutions are necessary to facilitate these new trends.

The COVID Demand

As mentioned early on, COVID-19 has accelerated the transition to online purchasing, putting more pressure on businesses to fulfil deliveries quickly. Many companies that aren't traditional online sellers have been forced to adopt online models for survival.

Additionally, boxes for vaccines, PPE, tests kits, and other COVID supplies necessitate increased cardboard packaging. Finally, minor lifestyle changes such as UK citizens rediscovering their love for gardening during the lockdown have influenced the packaging shortage. Brits have spent a whopping £3.7 billion on gardening alone while in lockdown, requiring significant amounts of corrugated packaging to pass through the supply chain to deliver garden tools and DIY supplies.

Price Increase

One of the major impacts that the UK’s cardboard shortage has had on box manufacturers is numerous price increases for raw materials. There are many factors at play that have caused these price increase, however the main factor revolves around the high demand for corrugated packaging.
The box making industry has not been able to keep up with the demand for corrugated packaging since the fourth quarter of 2020. Due to the surge in demand, box lead times will continue to remain extended throughout 2021.

Why Is the Demand So High?

The rise in demand has been caused by several factors. The first being the rapid increase in online sales caused by COVID-19 and the lockdown restrictions put in place in the UK. During this time, online retailing saw year-on-year growth of 62%. This increase led to a greater demand for corrugated cardboard packaging. The reason for this is that packaging products such as postal packs require additional corrugated packaging to be wrapped around them compared to a traditional multi-pack, which is typically found in a retail shop.

Another factor that has played a role in the price increase for raw materials, is a 30% increase in demand for corrugated cardboard which has created a peak that would annualise to circa 1.2 billion boxes in additional UK demand. In the UK, corrugated volumes are up by 5-6% however, the demand for corrugated cardboard is up approximately 30%, causing a snowballing of unmet demand. Finally, we have also seen a significant increase in the number of containerboard exports to China from Europe.

Why Are Prices Increasing?

Essentially, the price increase is down to the demand far out-stripping supply and because of this, prices will continue to rise until there is a closer equilibrium between both supply and demand. It is expected that there will be further industry-wide, corrugated cardboard box price increases during the remainder of 2021 with a cumulative impact of a 35-45% increase in box prices projected by the end of the year.

Is The End in Sight?

Corrugated packaging is in a super-cycle (a prolonged period of demand outstripping supply). The inflationary pressure of this super-cycle will continue throughout the remainder of 2021. Lead times will remain extended. New paper, board and box conversion capacity will come on stream during 2022 to start to restore the equilibrium. In the meantime, the security of the supply is as critical as price.

The Brexit Effect

The final Brexit deal was announced just a week before the deadline, so many enterprises battled uncertainty for weeks. Naturally, many businesses spiralled into panic buying and stockpiling of products and packaging solutions to ensure that they could fulfil demand if need be. Furthermore, the entire situation led to problems with transporting materials necessary to manufacture corrugated cardboard boxes across the Channel. Finally, the increasing amounts of paperwork and general confusion regarding the Brexit conundrum only worsened the process of securing corrugated cardboard.

The Impact on Cardboard Packaging Manufacturers

The implications of the shortage of corrugated packaging boxes are extensive for packaging manufacturers. Some of these effects include:

Shortage of Raw Cardboard Materials

At the core of this cardboard shortage is the inadequacy of raw cardboard materials necessary to make these cardboard packaging solutions. Fibre (used paper and cardboard) is needed to manufacture millions of cardboard boxes needed for medical supply and food distribution. However, several local councils have suspended their routine recycling collections due to the pandemic's pressures. These councils are struggling to keep up with a spike in waste collections that resemble levels at Christmas time because many households are in lockdown.

Consequently, these local authorities have either scaled back or suspended green waste, food, and other recycling collections. As such, many experts are concerned that fibre is already in short supply within Europe because more and more cardboard boxes are ending up in landfills instead of being collected and recycled.

Increased Demand for Cardboard Packaging

Multiple sources highlight the increased demand for corrugated packaging solutions from businesses in the retail and e-commerce space. There has been a tenfold increase in cardboard price since the pandemic's onset, resulting in many retail and e-commerce enterprises scrambling for box supplies.

Increased Lead Times

Boxes needed for packaging and distribution are made from recycled materials. Since so much packaging is now sitting idle in consumers' garages and homes, there is a significant challenge with getting these materials back into the recycling network. This shortage has led to an increase in the lead time on orders to get boxes made.

A standard box having flaps at both top and bottom typically takes a few days to create and a week to deliver. However, businesses now have to wait up to three months to get their boxes. Customers are also being affected since expected delivery periods are being shifted back due to the shortage. Therefore, many companies have had to appease disgruntled customers within this period, explaining the difficulties of sourcing cardboard boxes, hoping that clients would understand. Some are even going the extra mile to try out various packaging redesign solutions. For example, some companies are using plastic packaging now, while others are thoroughly wrapping boxes without lids as their new packaging solutions to allow them to deliver products.

Reduced Number of Staff Due to The Pandemic

COVID-19 undoubtedly impacted the global workforce, forcing significant adjustments in everyday work routines. Due to social distancing concerns, many companies were forced to run intense shift systems, ensuring that their physical locations were deliberately understaffed to reduce infection risks. Therefore, decreasing numbers of staff working in cardboard manufacturing companies meant less labour to keep up with the growing demand. As such, the time taken to produce cardboard solutions has substantially increased, as workers available have to spend more time handling massive orders, which multiple hands should ideally cater to.

Don’t Panic; Get in Touch and Find Out What You Should Do Next

Despite the current shortage, slight and encouraging signs indicate that the corrugated cardboard market's capacity is slowly increasing. Nevertheless, demand for cardboard is still strong, consumer behaviour will likely change permanently, and there is still uncertainty regarding the pandemic. However, this is no cause for panic because as Brexit settles and the lockdown slowly comes to an end, the situation will likely level out on its own.

If you are looking for the ideal corrugated packaging solution, see how DiamondBox can help you by contacting our team via our contact form below. Alternatively, you can get in touch with a member of our team on 0121 505 2211 or by emailing us at sales@diamond-box.co.uk.