Causing Retailers To Box Clever
BY ANDREW WILSON
Note: This industry update was written by our Chairman Andrew Wilson in 2021
Reading the press in recent weeks, it would appear the global shortage of cardboard in the UK has finally hit the mainstream. At one point in the week it occupied the top spot on the BBC news.
I may have been tempted to put it down to a quiet news week if it wasn’t for the fact that it was also very much the talk of the town for the wine trade also. We had first-hand experience of the effects an air of panic created with our customers when bottle transit packaging availability became an issue.
Whilst I am no fan of Amazon, the headlines declaring that “Amazon has taken all the card” are a gross simplification of the issue and one I feel is unfair. As a wholesale distributor of transit packaging and shipping boxes to the wine trade, it would be remiss of us not to try to redress the balance and give you a clearer picture of what is going on, hopefully, it will go some way in relieving any misgivings or concerns.
Since the first lockdown in March last year, the problem has been building when demand from all online retailers exploded, particularly within the wine trade as drinking at home became the new going out. I am sure that many of you experienced this first hand and we certainly saw it in exponentially increased demand for transit packaging, re-packing cases and carry-home solutions.
This created problems within the recycling chain. Prior to the pandemic, most deliveries were made directly in bulk to shops and restaurants whose rather more sophisticated recycling policies allowed it to find its way quickly back into the supply chain.
But with the high streets closed, most cardboard is going directly to your everyday household and taking much longer to reach the recycling chain; and, even if it does, there is the possibility of it being contaminated.
We expected demand for shipping cases for home delivery to plateau then slowly subside, but it just kept growing. We managed to keep up with demand until the last couple months of 2020 at which point lead times from our supplier went from 2/3 weeks to 8+ weeks which caught us slightly on the hop.
The lead times increased as paper and board mills reached capacity. Unfortunately, paper mills and board plants cannot be expanded overnight and any increase in capacity would take months to have any impact.
Our stock situation in January was dire but it is improving every day at the moment and come the end of this month we will have more stock than we’ve ever had. So, despite headlines, even now we’re able to offer a solution delivered the next day, even if it is a slightly different product to the one you usually use.
As ever, with increased demand comes increasing prices; good old market forces in action. Cardboard prices are generally pretty stable but every few years they go through a pattern of multiple price increases in a short space of time followed by periods of calm.
We have only seen this happen 3 or 4 times in 30 years but it is certainly happening again. We saw an increase of around 8% in late February and another 8% is being pushed through in early April.
There is talk of at least another 8% to come, which we hope is just a rumour!
As with any business we try to absorb these increases wherever possible or pass on reduced increases to our customers to try and soften the blow. However, when you see increases like these it is impossible for it not to have a significant impact on prices.
For our customers, savings of up to 20% can be made through bulk buying and ordering less frequently but in pallet quantities rather than smaller regular deliveries. This is one-way retailers can box clever and dodge the inevitable bullet caused by the effects of the global pandemic.
For more information on what packaging you need for your business, read Your Guide to Bottle Transit Packaging.
Our experts are on hand to help guide you to the best possible prices for your business, so do reach out to us and call our team on 020 7737 9500 or email email@example.com. It can’t hurt to put our price promise to the test!