First it was toilet paper. Then it was processors and other silicon. Now it’s cardboard. (And there are a lot of other things in between.)
The latest kink in the planet’s ever-knotty supply chain is one that’s left retailers, shippers, and consumers all confused. Cardboard supplies are unreliable, as are other packaging materials such as paper and plastic. And what’s available costs more, with plenty of companies passing the higher costs on to customers.
Many of the cardboard-producing paper mills around the world have been closed at various points during the COVID-19 pandemic. Although plants are back online, they are still scrambling to fill a backlog of orders.
Meanwhile, consumer shopping habits changed by the pandemic are also playing a role. With most of the world experiencing some sort of lockdown since early 2020, home-bound shoppers have increasingly turned to Amazon and other online outlets for their necessities.
Complicating the situation is last winter’s deep freeze that shut down several Texas power plants for days. Without power, refineries would not be able to make plastic used in shipping materials. That, in turn, led manufacturers and shippers to rely more on other products, such as cardboard.
“The types of materials that would be key and the raw materials that go into them — polyethylene, polyurethane — we’ve seen the cost of those raw materials increase by 50 percent year over year,” Vipul Shah, the chief product officer of Next Trucking, a startup for logistics technology, told NBC News. “The story for packaging is the same.”
With shipping giants like Amazon able to secure supplies due to their size and massive bankroll, the rest of the world faces higher prices and a shortage of supplies.
“Clearly someone like Amazon will be at the front of the line to get their share of capacity, while these smaller companies are at the back of the line. They don’t have the ability to absorb these costs so easily,” Andrew Hogenson, the global managing partner of consumer goods, retail and logistics at Infosys Consulting, told NBC News. “While smaller to medium-sized companies get stuck or have to pay exorbitant prices.”