The Evolution of Corrugated Packaging: How Technology is Shaping the Future

The corrugated packaging industry has long been known for its versatility, strength, and recyclability. It has been the backbone of logistics, protecting goods in transit for over a century. However, the industry is still growing. Technological advancements propel it into a new era of innovation, efficiency, and sustainability.

At Royal Containers, we pride ourselves on staying at the forefront of these changes, continually evolving to meet the needs of a fast-paced, ever-changing market. Let’s take a closer look at how technology is shaping the future of corrugated packaging.

Automation and Smart Manufacturing
Manufacturing efficiency has skyrocketed in recent years thanks to automation. Automated systems in corrugated packaging plants not only boost production speeds but also reduce errors. Robotics are used for precision cutting, folding, and high-end graphics at rates that manual processes simply can’t match. The integration of smart manufacturing technology allows for real-time data monitoring, enabling greater optimization of production time, predictive maintenance, inventory control, and market trends.

This shift toward automation ensures a higher level of consistency and reliability while minimizing waste—critical in an industry focused on sustainability.

Sustainable Materials and Processes
The demand for eco-friendly packaging has never been higher, and corrugated packaging is rising to the occasion. Technological advancements in material science are leading to lighter yet stronger corrugated board combinations. These improvements reduce the amount of raw material required without sacrificing durability, meaning less waste ends up in landfills.

Additionally, innovative recycling technologies are enhancing the efficiency of the paper recycling process, allowing corrugated materials to be reused more effectively than ever before. This commitment to sustainability is crucial as businesses and consumers alike seek more environmentally responsible solutions.

Digital Printing Revolution
Gone are the days of plain, brown boxes. The rise of digital printing technology is transforming the way companies view their packaging. Digital printing offers more flexibility, enabling brands to customize packaging with high-quality graphics and intricate designs. Unlike traditional printing methods, digital printing is more cost-effective for shorter runs and allows for quick changes in design, which is perfect for seasonal campaigns or promotional products.

At Royal Containers, we’re excited to leverage this technology to help brands tell their stories through creative and impactful packaging.

The Role of Data and IoT
The Internet of Things (IoT) is finding its way into corrugated packaging. Smart packaging solutions are beginning to incorporate sensors and data trackers, providing valuable information about the condition of the package during transit. These technologies allow businesses to monitor temperature, humidity, and handling conditions in real-time, ensuring that products arrive in perfect condition.

The implementation of IoT in packaging is particularly beneficial for industries like pharmaceuticals, food, and electronics, where precise conditions are critical. As this technology evolves, we expect to see even greater adoption across various sectors.

Customization and 3D Design
Customization is no longer a luxury but an expectation. Advances in 3D design software are making it easier for companies to create unique, tailored packaging solutions that cater to their specific needs. These tools allow designers to visualize and tweak their packaging before it’s produced, ensuring a perfect fit for their product and reducing waste from design errors.

Furthermore, with the rise of augmented reality (AR) technology, customers can now view their products and displays in a retail environment before they even exist. This immersive experience allows for greater confidence in packaging decisions, enhancing client collaboration and overall satisfaction. The combination of 3D design and AR streamlines the entire packaging development process, providing a cutting-edge approach to tailored solutions.

The Future of Corrugated Packaging
As the packaging industry continues to evolve, Royal Containers remains committed to adopting the latest technologies to serve our customers better. Whether through automation, sustainable practices, or cutting-edge printing and design techniques, the future of corrugated packaging is bright.

Technology is not just enhancing the efficiency of production; it’s transforming packaging into a strategic tool for businesses. From reducing environmental impact to providing interactive customer experiences, corrugated packaging is no longer just a protective layer—it’s a key player in the supply chain of tomorrow.

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2023 Top Trends in the Corrugated Industry

The corrugated industry is poised to witness significant developments in response to evolving consumer demands and market dynamics. As a leader in our industry, it is crucial to stay ahead of the curve and adapt to the latest innovations in our space. This blog explores the top trends we have identified in Q1 of 2023, focusing on sustainability, automation and digitalization, customization and personalization, e-commerce, and lightweight packaging.

Sustainability: Protecting the Planet, One Package at a Time

In recent years, sustainability has emerged as a key concern for consumers and businesses alike. With growing environmental awareness, consumers are actively seeking eco-friendly packaging solutions. Corrugated is a perfect fit to this need with our sustainable packaging options. Corrugated packaging reduces carbon footprint by being made from a renewable resource and being highly recyclable, which reduces the need for virgin materials and the energy required for production. Additionally, corrugated packaging’s lightweight and durable design reduces transportation emissions and waste. By contributing to a circular economy, corrugated manufacturers like us can meet the demand for sustainable packaging while reducing our environmental footprint.

At Royal Containers, we have been a proponent of sustainable solutions for decades. By being vertically integrated with corrugate producers Greenpac and Tencorr, we are able to maintain greater control over raw materials, supply chain, and production processes, allowing us to reduce waste and improve efficiency in our operations. It means a more sustainable approach to manufacturing and distribution of our packaging products.

Automation and Digitalization: Driving Efficiency and Cost Reduction

Automation and digital technologies are transforming industries across the board, and the corrugated sector is no exception. Manufacturers are increasingly adopting automated systems and digital tools to streamline operations, enhance efficiency, and reduce costs. From automated packaging lines to advanced data analytics and inventory management systems, technology is playing a crucial role in optimizing production processes and improving overall performance.

We are in the process of leveraging technology to enhance our services by developing an improved online ordering portal that will automate and streamline the ordering process, providing customers with a straightforward and efficient experience. The new portal is expected to increase efficiency, reduce errors, and enable greater customization options for our customers.

Customization and Personalization: Meeting Consumer Demands

In an era of personalized experiences, consumers expect products and packaging to be tailored to their individual needs. Corrugated manufacturers who do not adjust and reinvent, may risk being left behind.

At Royal Containers, we have invested in state-of-the-art machinery, such as the Masterline DRO, to bring more customization options to our customers. “Acquiring the Masterline is a direct result of listening to our customers’ needs and the ever-evolving e-commerce marketplace,” according to Vice President of Operations at Royal Containers West, Greg Marcella.” This machine has the ability to print two colours in line and allows us to tailor our product to those looking for additional impact beyond just what can be seen from the outside. The pivot toward customization is driving our equipment purchases.” We are creating packaging that reflects the unique preferences and characteristics of each customer. This approach strengthens brand loyalty and also allows the brand owners to deepen their customer’s experience.

E-commerce: Protecting Products on the Journey

The rapid growth of e-commerce has had a profound impact on the packaging industry. As more consumers turn to online shopping, there is a heightened need for packaging solutions that can safeguard products during shipping and handling. Corrugated material plays a big role in robust and protective packaging designs that can withstand the rigors of transportation. Innovative packaging solutions, such as corrugated boxes with enhanced cushioning and structural integrity, are essential to ensuring customer satisfaction and minimizing product damage in transit.

Lightweight Packaging: Efficiency Meets Sustainability

Reducing the weight of packaging materials is a trend that has gained traction in recent years. Lightweight packaging offers several benefits, including lower shipping costs and reduced environmental impact. The cost of shipping has forced suppliers and brand owners to explore more sustainable packaging solutions. Corrugated manufacturers continue to lead the charge in exploring innovative ways to optimize packaging design without compromising product protection. Through material innovation, engineering advancements, and strategic design, we can create lighter packaging solutions that meet industry standards while promoting sustainability.

At Royal Containers, we understand that staying informed about industry trends is crucial to remain competitive and meet the evolving needs of consumers. Sustainability, automation and digitalization, customization and personalization, e-commerce, and lightweight packaging are the top trends shaping the industry in 2023. We’ve embraced these directions established in Q1 and plan to hold them tightly as we move onward!

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Banning Paper Bags is Not the Solution

Article By: Rachel Kagan

In recent months, the Paper and Paperboard Packaging Environmental Council (PPEC) has been seeing a concerning trend of some governments choosing to ban paper bags. In Canada, the Yukon banned single-use paper bags of all sizes supplied by retailers to customers, and in the U.S., New Jersey banned paper carryout bags. Both jurisdictions essentially say they have done this because paper bags are “single-use items,” that “require resources and energy to produce, contributing to pollution,” and recommend the use of reusable bags.

And it’s not just some governments that are looking to ban paper bags. The LCBO recently announced it would be phasing out single-use paper bags from its stores. While we appreciate that businesses have the authority to make their own business decisions – and we recognize that LCBO is not the first to want to go bag-less, Costco doesn’t offer any bags at checkout – PPEC is concerned with the unintended consequences banning recyclable paper bags may create.

PPEC takes no issue with the concept of reuse, but while some government jurisdictions have banned paper bags because they say they require resources and energy to produce, it should be noted that reusable bags also require resources and energy to produce. But unlike paper bags, reusable bags – which can be made from plastic, cloth, cotton, nylon, or polyester – are typically not recyclable.

We know the function of a reusable bag is to be reused, but depending on how they are used and if they are cleaned, they could create more waste, defeating the purpose of such initiatives intended to reduce waste.

Reuse requires consumers to be mindful and responsible, remembering to bring their reusable bags when they go shopping, but sometimes they forget and have to buy new bags at the store. Eventually, they may realize that they have too many bags and may decide to throw some out. Consumers also have to remember to wash their reusable bags to keep them clean; if not washed, it could create sanitary issues – especially for reusable bags used for food items – resulting in being disposed.

Meanwhile, paper bags are made from a renewable material and are highly recyclable. Most Canadian residential recycling programs accept paper bags in their Blue Boxes, and once collected and sent to a Material Recycling Facility, the paper fibres can be recovered and used to be remade into new paper packaging products.

The LCBO’s press release says their initiative “will remove roughly 135 million paper bags annually from its stores, diverting some 2,665 tonnes of waste from landfills.” PPEC wants to know why these recyclable paper bags are being landfilled in the first place if paper bags are accepted in residential recycling programs in Canada, and end markets exist for them?

On average, paper packaging fibres can be recovered and reused 5-7 times. The Canadian paper packaging industry has made using recycled content an inherent part of their business model for decades. They need clean used paper packaging because they use it as their feedstock, and in many cases, PPEC members have their own recycling divisions to make sure they have a good supply of recycled paper fibres coming in.

The LCBO’s press release also states that their initiative will save “the equivalent of more than 188,000 trees every year.”

While most paper packaging made in Canada is produced with recycled content, the paper fibres it was originally made from came from a tree. However, the Canadian paper packaging industry doesn’t use much in the way of freshly cut trees, and the little that is harvested must be successfully regenerated by Canadian law.

According to the latest data from Natural Resources Canada’s State of Canada’s Forests Annual Report, in 2020, the total forest harvest (for lumber and all paper grades, including packaging) represented 0.2% of Canada’s forest land, while 600 million seedlings were re-planted in Canada’s forests.

The term “single-use” has been coming up more often lately, mostly in the context of governments banning single-use plastic products, which is happening here in Canada and Europe.

In general, single-use plastic products are understood to be those items that are used once, or for a short period of time, before being thrown away. The focus has been on plastics, given their low recycling rates, and the impact plastic has on the environment, as Environment and Climate Change Canada explains:

“Canadians throw away over 3 million tonnes of plastic
waste every year. Only 9% is recycled while the rest ends up
in our landfills, waste-to-energy facilities or the environment. Plastic
waste and marine litter burdens our economy and threatens
the health of the environment including wildlife, rivers,
lakes and oceans.”

Plastics are mainly made from chemicals that come from the production of non-renewable fuel sources such as gas and oil. It is a complicated material given there are many different types of plastic resins that each have different properties, which impact their recyclability. Generally speaking, the types of plastics that are recovered the most are those that have established end markets in place where used plastic can be sold so that they can be used in place of virgin materials. Which means that only some forms of plastics can be recycled.

The term “single-use” has been connected to national government initiatives that are meant to reduce plastic waste and pollution, but is now being applied to other materials.

In essence, all materials are single-use, but some are more successfully recycled than others.

Paper packaging has an established recycling system, and most importantly, established end markets in place to capture used cardboard, boxboard, and kraft paper, so that those materials can be recovered and recycled to make new paper packaging products.

One material is made from a renewable resource that is highly recyclable, while the other material is made from a non-renewable resource that on the whole is minimally recyclable, should both be referred to as “single-use”? Or maybe that is not even the right terminology to begin with? In PPEC’s opinion, lumping these materials together creates the unintended consequence of sending the wrong message about what is recyclable and what is not.

But vocabulary is not the real issue here. The issue is that there is too much waste in Canada, but there are opportunities to increase recycling with a more harmonized approach, and consumers playing their part to properly clean and sort their recyclables. Waste diversion is a shared responsibility – we all have a role to play to ensure waste is minimized and, wherever possible, diverted from landfill. The issue is not with paper bags, and a ban is not the solution.

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Royal Containers Responds to the Current Corrugated Market Conditions

Our industry continues to skyrocket while we face unprecedented volumes as the pandemic persists. The spike in e-commerce and demand for corrugated goods has resulted in a supply chain that is stretched to its limits. Consequently, we are experiencing extended lead times, ranging from 2-4 months, industry-wide.

We are seeing continued price increases due to outages, shortages, and delays in raw materials. Availability is an area of such concern that paper mills and corrugators have had to restrict allocations of products to their customers and some box makers are curtailing the acquisition of new business in order to keep up with customer demand.

As a leader in this industry, we have put together a strategy to grow despite all of these challenges. Here is what Royal is doing to increase our capacity and why we are still taking on new business and not restricting allocations:

1. Earlier this year, we made the bold decision to expand our capabilities by relocating our Royal West division. The St. Thomas facility is triple the size of our original London location and will be a state-of-the-art production centre with additional modern printing capacities, effective January 2022.
2. We are investing millions of dollars in new equipment. Over the past year, we have purchased a high-speed rotary die-cutter, 4-colour inside/outside DRO specialty folder gluer, flatbed die-cutter, and new automation to feed and stack boxes on Flexos. All equipment will see upgrades including a new conveyor system, two new unitizers, and a new scrap system. These machines will allow us to produce faster, more efficiently and meet our customers’ needs.
3. We continue to invest in our Continuous Improvement (C.I.) plan both on the plant floors and in our offices. The C.I. system has proven successful in our Brampton location for 3 years. By utilizing visual workspaces and the implementation of streamlined processes, our employees benefit from work efficiency with less downtime.
4. Leadership is one of our four key values. We pride ourselves in our ability to develop leaders, and an environment conducive to leadership. We have found that leadership has been more critical than ever during the pandemic. Our leadership team meets weekly to discuss, collaborate, and action important items. Regular communication results in well-articulated goals that are spread company-wide.
5. Supplier delays continue to impact, but our vertical integration strategy minimizes the effect. We are utilizing our vertical integration partners to ensure we maintain a secure source of sheets from our corrugators at Tencorr and ensuring a consistent supply of paper from our papermill, Greenpac. This process provides security for our supply of materials but also boosts our green initiatives with this closed-loop sustainable process.

All of these strategies have allowed us to increase our capacity and reduce customer downtime as much as possible during this unprecedented time of growth.  We invite new customers to partner with us at Royal Containers while we continue to support our existing customers.

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Current Containerboard Market Conditions In North America: Part 3

The corrugated marketplace remains very strong; the US containerboard and box market is up 5.5% over last year and the increase sits even higher in Canada at 8.5%

The upward trend was spurred by increased overall global demand for containers. With growth over last year of 30 percent, e-commerce continues to drive demand for boxes. Domestically, consumer spending remains strong, propped by government stimulus as well as other budgetary savings. Household spending remains elevated, particularly on food (think of the phrase “pantry loading,” coined in the pandemic’s early days) and other home commodities. Strong industrial demand points to more locally made products being sourced in the bounding Canadian economy.

Because of this strong demand, the supply of containerboard and therefore boxes have dramatically tightened. Consequently, we continue to operate under conditions of long lead times between production and delivery. In fact, a drastic deficit of some grades of paper has meant an unprecedented shortage of certain box types. In North America, weather and ransomware attacks have contributed to the shortage of containerboard supply.

This macroeconomic condition leads to price increases. Our industry has already experienced two increases in the past year. A potential third price increase is expected.

There are inflation pressures as well, supply chains are experiencing major shortages, wood, raw materials, such as OCC (Old Corrugated Containers that are used to make recycled paper), energy, and freight.

Questions remain around the employment rate for part-time and lower-income workers. Perhaps linked to the aforementioned explosion of e-commerce.

Amazon has built and leased out over 50% more space in 2020, with 2 and likely more distribution locations coming in 2021. Wal-Mart has used its massive footprints as distribution centres to move products and offer more pickup centres. Regardless, these conditions have contributed to our expansion. Royal is moving our London operation into a much larger plant. We must focus on efficiency and learn how to produce more with less. Our St. Thomas building is an exciting part of our future.

These are very strange times, for some of us the growth is tremendous, and yet many of our local businesses suffer. We have endured a pandemic that is still among us over a year later and has impacted our daily lives, specifically in a very depressing way. A big part of what makes us human, our communication and relationship building, has been put on hold. Now more than ever, we need to care for our mental health and find the strength to remain resilient, to stay authentic to our values, to stay the course, and remain empathetic. Royal Containers will continue to align our decisions with our Continuous Improvement Plan by creating a supportive environment that improves the work environment to maintain safety and productivity.

With the momentum our vaccinations are having, we can finally look forward to some semblance of normal. And this is good😊.  We could all use a rebound like the one experienced by the Montreal Canadiens in the Stanley Cup Finals! Go Habs Go! ~Kim Nelson

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Current Containerboard Market Conditions In North America: Part 2

Containerboard & Supply Chain Impact

December was a solid month with record-breaking sales for many manufacturers and their supply chains, despite it being the month with the fewest invoicing days. Having said this, containerboard mills were true to their word and increased operating rates. In December, our recycle paper mill, Greenpac, ran 24/7 for all 31 days in an attempt to reduce the paper shortage. However, demand remained high, too high to have an impact on the current situation and we continue to see long extended lead times.

We believe this situation will remain until the summer months and are anticipating another price increase to come into effect in the spring.

Corrugator plants, such as our sheet feeder plant Tencorr, continue to run with its hands tied. Scheduling based on what paper arrives for the week and shipping out as quickly as possible.

As the next link in the supply chain, we at Royal Containers, continue to run orders as soon as we receive materials, but our lead times remain very long.
despite it being the month with the fewest invoicing days. We are strategic in scheduling production and communication with our customers is the top priority. Our manufacturing sites in Brampton and London are operational 24/7 with the best talent in the industry.

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Current Containerboard Market Conditions In North America: Part 1

Between February and May, our economy was saturated with financial hardships when the COVID-19 pandemic hit our communities.  We were faced with a great challenge, to survive health-wise and business-wise.  During this time, paper mills moved ahead with scheduled downtime production to support the lack of demand.  While businesses started to improve, southern paper mills were hit with further devastation when stormy weather closed operations impacting both recycled and virgin paper mills. In contrast, June, July, and August of 2020 saw corrugated box shipments in North America soar to the second highest in the past thirty years.

While Containerboard mills are operating at full capacity; the factors mentioned above have resulted in extended delivery lead times to the corrugators. This holds true for Greenpac and TenCorr. Currently, our corrugated sheet lead times continue to grow.

Paper shortage and extended lead times for the corrugators inevitably impact box plant lead times. The demand for corrugated products by e-commerce companies is expected to see corrugated box shipments increasing by a minimum of 2% annually for the foreseeable future, irrespective of the state of the economy.

This combination of economics results in price changes and Containerboard mills have already announced price increases. The containerboard and corrugated industry must continue its significant capital investment to keep pace with the growing demand for corrugated products.  The five major containerboard mills recently announced a price increase price of $50 US per ton on Linerboard (7%) and Medium (8%) on shipments as of November 2, 2020.  This is the first price increase of this magnitude by Containerboard mills since March 2018.

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Market Insights from Royal Containers: COVID-19 Edition

The coronavirus has become one of the biggest threats to the global economy in 2020 and has had an undeniable impact on the financial markets. For the industries surviving these unprecedented times, we hope the worst is behind us. For businesses who were forced to close as a result of the virus, our thoughts are with you.

How has COVID-19 changed our industry?

Prior to the pandemic, the globalization of the corrugated market had been building over the past 20 years. There was a steady flow of goods between international players and partnerships extended beyond borders. In 5 short months, there has been a paradigm shift towards localized businesses, and the corrugated industry is no exception. At Royal Containers, we are actively looking to support local businesses, which ultimately means supporting our neighbours, our friends, and fellow Canadians during these uncertain times.

From what we are hearing from industry professionals and competitors, experts are advising businesses to strap in and accept our current state of affairs for the remainder of 2020. Despite the economic downturns from the first half of this year, our industry can still expect a modest growth rate of 1-2%. From industry resources, reports are indicating growth in our sector from June onwards. There has been a small uptick in the number of announcements regarding expansions, investments, and consolidations within the corrugated market.

How has COVID-19 impacted Royal Containers?

In the height of the pandemic, we experienced a steep decline in sales. A combination of fear, instability, and panic in the markets resulted in an average of 30% decrease both in and outside the corrugated industry.

Along with many other businesses, Royal Containers was thrown off course in a downward spiral. There is no such thing as a crystal ball to see what the future has in store, and with each passing month, it grew more and more difficult to build out accurate sales targets. As part of our quarterly review, we found ourselves re-evaluating our 2020 strategic goals and growth targets.

As of July, we are happy to report that sales have bounced back and we are achieving our new yet reduced targets. Our pipeline looks promising and we expect to meet our “pre-COVID” goals in 2021.

How will Royal Containers remain a leader for the balance of 2020?

Our keyword for the remainder of the year is endurance. In terms of the coronavirus, what we had once hoped would be over in a sprint has now turned into a marathon.

A testament to our success through good times and bad is our ability to pivot and reset. As a result of the virus, we are focusing on markets such as; home office electronics, food and beverage, PPE and medical supply, health and beauty, private labels, e-commerce, online companies, the pet industry, and cannabis.

As Ontario continues to operate in Stage 3, more businesses are re-opening and some protocols are beginning to loosen. We have made the decision as a company to persist with our stringent safety protocols to ensure the safety and protection of our employees. The mental and physical well-being of our employees will always remain our number one priority.

Beyond our ability to adapt, we believe our dedication to our values is what sets us apart as a leader. Our corporate values of We Respond, We Perform, We Care and We Lead ring true now more than ever. Despite the change that is happening around us, we must stay the course on our company vision; to build partnerships in packaging. Even if we cannot be face to face with all of our co-workers, customers, or suppliers, we continue to build upon our relationships in new and innovative ways.

The impact of the pandemic has been enormous, and the ripple effect will be felt for years to come but Royal Containers will emerge the other side stronger than ever. Thank you for being our partner and staying the course together through this challenging journey.

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Market Insights from Royal Containers

Overall, Canadian economic results were modest yet healthy. Despite the fact that North America was challenged by corrections in the housing market and trade restrictions, we still saw a growth in our National GDP of approximately 2%.

For the corrugated market, the Pulp & Paper industry is generally a good indicator of overall economic wellness. In recent years, there has been a massive spike in demand for paper and corrugated products thanks to Amazon and the growing popularity of online ordering. In fact, the pulp & paper/corrugated industry experienced the same percentage of annual growth (roughly 2%). Although I would like to see a higher rate for our industry, 2% is considered a healthy growth rate and directionally correct.

As a whole, the corrugated industry witnessed fewer announcements of consolidation and experienced a healthy dose of investments and expansions throughout the year. Another positive trend within our industry is the focus on sustainability. Key players in the market are promoting the importance of choosing paper-based products over plastic and how it contributes to a healthy planet for all. At Royal Containers, our story continues to talk about sustainability and social responsibility.

Similar to the rest of the industry, our growth this year was healthy but modest. 2019 proved to be a very challenging year and one riddled with unexpected change. Although we fell slightly short of our overall sales goals, I am happy to report that in the end, these challenges made us stronger. They reminded us to not lose sight of one of the important attributes of a successful business…. resilience.

In hindsight, we knew a slowdown was coming. After 5 years of double-digit growth, history would suggest a downturn is inevitable. Combined with other factors such as a decrease in demand for corrugated and readily available supply, a softness in the marketplace occurred. Softness in the marketplace encourages customers to be aggressive by reaching out to the competition and looking for ways to drive costs down. In addition to changes in the market, Royal Containers was faced with significant leadership changes. Several key positions retired in 2019, to these special people, we can’t thank you enough. And to our new leaders, we are excited about the future.

The key take away for Royal 2019; fear complacency and exercise resiliency.

Moving forward in 2020

Building Partnerships in Packaging remains the reason why we, Royal Containers, exist. We will continue to strengthen our relationships both inside and out of the office by keeping true to our corporate values: Being Responsive, Caring and Authentic, Performance-driven and Leadership stewards.

[blockquote author=”” link=”” target=”_blank”]Our focus turns to achieve the goals set out in our 2020 strategic plan. Our destination is clear and we have communicated this to our employees. Please Come in for a visit and let us share with you our 2020 Strategic Plan.[/blockquote]

Kim Nelson, President

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Market Update – The North American Containerboard Industry in 2018

Market Insights from Royal Containers Vice-President, Bill Routledge:

RISI’s Pulp & Paper Week report in their January 19th issue:

“expectations that North American containerboard producers will try for a March or April price hike remains high, with industry production and operating rates finishing last year on a strong note.”

Box demand has remained strong to begin January causing some to expect a price increase announcement during January.

A mill increase is going to be largely dependent how the two largest players, International Paper and West Rock, feel their chances of being successful in raising box prices. The major integrated company thinking has been changing recently where a price increase now requires the ability to raise box prices; not just increase mill prices.

North American Containerboard mills raised prices $50 / ton [7.6%] in April 2017, following a $50 /ton [6.5%] in October 2016. “If a North American containerboard mill price increase were announced with the next few weeks, it would be tied to either the supply/demand fundamentals or non-fibre cost inflation.” Chinese OCC prices dropped by $30 a ton this week, but most analysts expect Chinese imported OCC prices to increase substantially over the next few months.

The robust US economy and the growing e-commerce retail industry boosted domestic box demand by 3.6% in the past year. These factors combined with the strong demand for global linerboard export orders resulted in containerboard mills output increasing by 3.6% in December from the previous year – which is the biggest jump since 2010. Mills ran at 98.9% capacity in December in what has been typically a low output month. Year-end holiday e-commerce shopping had a major impact on the demand for corrugated products.

A recent Pulp & Paper Week survey of 25 Independent box makers last November reported 87% of the respondents expect to see containerboard prices to increase during 2018. Most expect the price increase to occur by June 2018. Many independent box makers don’t support a containerboard mill price increase this year regardless of the supply/demand conditions. Others realize a price increase is inevitable, even if not justified because of two companies controlling over 60% of the North American containerboard market.

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