Cardboard boxes in which e-shops send their goods are mainly made from recycled paper. COVID has introduced a seemingly insoluble puzzle to the industry producing these boxes - demand for boxes from e-shops has surged, but the availability of quality paper for recycling has significantly declined. Therefore, a shortage of packaging material is looming not just in Europe.
Where has the quality paper for recycling gone? When we speak of quality paper, we primarily mean used office paper from schools, offices, and companies. Yes, these institutions in their regular operations produce a vast amount of millions of tons of paper for recycling. And it is precisely this paper that is missing today.
The first warnings from European manufacturers associated in state associations came already in April 2020. Simon Ellin, the executive director of the association, stated, “Our members are hearing reports from all corners of the world that there is a very strong demand for cardboard, paper, glass, metal cans, and plastics. We must keep our supply chains open and ensure that food and medical supplies are delivered to those who need them.”
The situation also escalated in the UK, where packaging material manufacturers associated into an association called on the government in an open letter to negotiate a common solution to the situation that has arisen.
Manufacturers of pharmaceuticals in India also report a shortage of packaging materials. It might seem like a story from a distant world that has no practical impact on our lives. However, the opposite is true. First, the packaging material market has been globalized for some time, so if pharmaceutical manufacturers in India offered a higher price, the packaging material otherwise intended for European companies might end up there. Second, India is one of the largest importers of pharmaceuticals into the European Union, and stopping pharmaceutical deliveries due to a shortage of packaging material could pose a much greater risk than a shortage of paper boxes for e-shops.
A similar situation is in the United States, where the situation is complicated by an ongoing trade war with China and a sharp rise in transportation costs, especially for sea containers. The recycling industry association there issued a similar warning as their British counterparts.
Manufacturers of packaging materials from the Czech Republic and wholesalers refuse to publicly comment on the topic. Indirectly, however, they confirm that the shortage of quality paper for recycling will also affect the packaging material market in the Czech Republic. The first information about planned price increases is coming in. However, we believe that no dramatic supply drops will occur.
At ComGate, where we operate warehousing logistics for e-shops, we are closely monitoring the situation. With some clients, we have agreed that we will pack their goods in reused boxes to the maximum possible extent. It is interesting that while some of our clients are motivated by ecological reasons, others prefer this option for reasons of lower costs. Besides used boxes, we are also testing other types of packaging that do not require traditional paper boxes. We have also increased the operational stock of packaging materials and emphasized its planning. We are also expanding the number of suppliers so that in case of supply disruptions from one source, it can be operationally replaced by another wholesaler or manufacturer.
If you operate an e-shop and are dealing with packaging materials, we recommend considering several points in light of the above situation:
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