Dive Brief:

• The price of cardboard has remained fairly flat through a significant uptick in demand experienced during the coronavirus pandemic, according to the Producer Price Index for corrugated and solid fiber box manufacturing from the Bureau of Labor Statistics.
• The PPI shows that the prices set by the corrugated and solid fiber box manufacturing industry were down 1% YoY in November, after considerable growth over the last two decades.
• But rates could turn around in 2021 with producers pushing higher prices in the new year, according to comments from executives on recent earnings calls.

Dive Insight:

The cardboard box industry saw more demand over the course of the pandemic as consumers increasingly turned to e-commerce — where the cardboard box is king. 

"We continue to see very strong double-digit growth in e-commerce with increased consumer reliance on e-commerce as a buying channel," International Paper Chief Financial Officer Tim Nicholls said at the end of October.

As suppliers see this growth, they're investing in the infrastructure to meet the demand and are building that capacity near distribution networks.

"A percentage of our several hundred box plants are becoming e-commerce-oriented plants," International Paper​ CEO Mark Sutton said last year. "And they look different. And if we ever build a new one from the ground up, which I think we probably will, it will look different physically ... and you'll have more of those located right near the fulfillment centers."

Shipments of corrugated boxes were up 9% YoY in March when the pandemic first began to take hold across the U.S., and shipments were up more than 2% through the first 10 months of the year, according to figures from the Fibre Box Association.

"Demand for corrugated packaging, containerboard and food and beverage consumer packaging is very strong," WestRock CEO Steve Voorhees said on the company's November earnings call.

WestRock said its order backlog for its corrugated boxes are at a record level, suggesting a high number of customer orders, and box shipments in October were up more than 8% YoY. 

While the demand has increased, the PPI suggests that, on average, box makers have not increased their prices. International Paper​ described its pricing for industrial packaging as "stable" in its most recent earnings. But WestRock has already notified its customers of a price increase that will begin showing up in the early part of 2021.

We did communicate to our customers a $50-a-ton increase on containerboard and boxes," WestRock Chief Commercial Officer Jeff Chalovich said on the call, adding that increases will begin to show up in the first half of 2021.