Tight Cardboard Supply Chain Adds To Promo Industry Challenges
The economy is showing signs of a strong recovery, but businesses are managing several new challenges as that recovery pushes up against the ebbing pandemic, changes in consumer behavior and a taut labor market. Promotional products companies haven’t escaped those issues as 2021 progresses, and one of the industry’s most recent concerns is a tight cardboard supply chain.
The pandemic and the growth in ecommerce it spurred has elevated the demand for corrugated cardboard to unprecedented levels. Rising prices followed. Industry trade publication Pulp Paper News reported that in the first three months of 2021, the global price of wood pulp, a primary component in manufacturing cardboard, was up 30 percent.
The weather has also hampered cardboard production. International Paper, which produces one-third of the cardboard boxes used in the U.S., says that severe winter weather in the southern U.S. cost it 145,000 tons of production as supplies of various manufacturing inputs like fiber and petroleum-derived adhesives tightened.
“[Cardboard supply] is truly a concern and we have taken steps to lessen the challenges,” says Mary Dobsch, president of supplier The Chest. “Currently, we are now warehousing a much larger quantity of corrugate than we have had in the past. In addition, we have increased our reorder point. This has worked extremely well to date.”
Dobsch adds, “We do have a wonderful relationship with the paper mill and have had for years. This has certainly been a benefit this year. Having an established vendor that knows us does make doing business much easier.”
Cardboard supply chain issues and price increases are only one piece of the puzzle promotional products companies are working on as production levels ramp back up this year. Brandon Mackay, MAS, president and CEO of supplier SnugZ USA, points out, “I think the big question we’re trying to get our arms around is, will inflation hit every aspect of our business or just odds and ends? We’re experiencing pricing increases, not just in shipping materials, but almost across our entire business. The only way we feel we can combat pricing increases and much longer-than-expected lead times is to hedge where we can. Order more, store more and hope to sell, sell, sell in the third and fourth quarters.”