Cardboard Price Increases in 2024: A Growing Concern for Businesses
14th Aug 2024
Businesses are grappling with a significant rise in the price of cardboard, a key material in the packaging industry. This increase has been driven by a combination of factors, including raw material shortages, rising energy costs, and heightened demand, all of which have contributed to a challenging environment for companies relying on cardboard for packaging.
Drivers of the Price Increase
One of the primary drivers behind the surge in cardboard prices is the ongoing shortage of raw materials. The production of cardboard relies heavily on pulp, which is derived from wood. Global supply chain disruptions, exacerbated by environmental concerns and regulatory changes in forestry practices, have led to reduced availability of pulp. This has created a bottleneck in the production process, driving up the cost of cardboard betwen 6-12%.
Furthermore, the rising cost of energy has played a crucial role in the price increase. The production of cardboard is an energy-intensive process, involving significant amounts of electricity and heat. In recent years, the UK has seen substantial increases in energy prices due to a combination of factors, including geopolitical tensions, the transition to renewable energy sources, and inflation. These rising energy costs have been passed down the supply chain, resulting in higher prices for cardboard.
Impact on Businesses
The increase in cardboard prices is having a noticeable impact on businesses across various sectors. For retailers, especially those operating in e-commerce, higher packaging costs can erode profit margins. Many small and medium-sized enterprises (SMEs) are particularly vulnerable, as they may lack the financial flexibility to absorb these cost increases. In some cases, businesses have been forced to pass on the additional costs to consumers, leading to higher prices for goods and services.
Manufacturers are also feeling the pinch, particularly those in industries where packaging is a critical component of the product. For example, food and beverage companies that rely on cardboard for shipping and display purposes are facing increased costs that are difficult to offset without compromising on quality or customer experience.
Sustainability Considerations
The rising cost of cardboard has also prompted businesses to rethink their packaging strategies. Sustainability has become a key concern for consumers, and many companies are exploring alternative packaging materials that are both cost-effective and environmentally friendly. Some are turning to reusable packaging solutions, while others are investing in research and development to create more efficient packaging designs that require less material.
However, these changes come with their own set of challenges. Transitioning to new packaging solutions often involves upfront costs, and the availability of sustainable alternatives can be limited. Additionally, consumer preferences for cardboard, which is widely perceived as a sustainable option, mean that businesses must balance cost considerations with their environmental commitments.
Conclusion
Here at ASC Direct we strive to help deliver the best product at the right price, but we are in the hands of global supply chains and the impact of environmental and economic factors. While the current situation presents significant challenges, it also offers an opportunity for innovation and the adoption of more sustainable practices. Businesses that can adapt to these changes and find creative solutions to manage costs will be better positioned to thrive in the evolving market. Talk to us today about your packing needs by calling us on 0800 0731 126
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James Palfrey-Smith is the Commercial Manager at ASC Direct with extensive experience in both operations and sales. James is passionate about solving packaging problems, delivering fast customer support, and building lasting relationships. Outside of work, he enjoys outdoor activities like hiking and skiing. A fan of real ale and business podcasts, he continuously seeks personal and professional growth.
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