Corrugated: Corrugated sheets direct to end-user continue to grow on with a 'made-to-fit' focus

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Corrugated: Corrugated sheets direct to end-user continue to grow on with a 'made-to-fit' focus

November 30, 2018 - 17:26
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OAKLAND, CA, Nov. 30, 2018 (PPI Pulp & Paper Week) -US box shipments are on track to grow for a fifth straight year in 2018, and corrugated packagers also are growing in a smaller, non-box segment involving direct sales of sheets to end users.

RISI VP for packaging Ken Waghorne pointed to sheets for in-store displays, and for mini-flute corrugated converted at folding carton plants, slip-sheets used for goods shipped shrink wrapped on pallets, single-face corrugated, and fan-fold corrugated used in box-on-demand or so-called automated box maker systems.

"I know there are [thousands] of machines now in the marketplace and it continues to grow. I believe that folks like Amazon now own some," a US industry contact said.

WestRock's box on demand equipment was being run by more than 3,400 corrugated or beverage customers in the second quarter this year. WestRock said it installed more than 50 machines in the second quarter alone. Packsize and T-ROC headquartered in the USA make fan-fold and automated box maker equipment that runs corrugated sheets. Poland's Boxmat, Italy-based Panotec, and the UK's BCS also produce automated box making equipment.

"Most boxes made from these machines are for e-commerce, custom cabinetry, picture framing, and small parts suppliers. The only segment before that bought large amounts of sheets direct was the mattress industry that put sheets on the bottom of mattresses," said one integrated company official.

But now in Costco, as an example, five-foot-high corrugated displays dot the front of its entrances with rows of nearby pallets stacked five-high with product that is separated sometimes by square corrugated sheets or die-cut pads with rounded corners. The die-cut pads are counted as box shipments by the Fibre Box Association (FBA). The corrugated sheets without die-cut are not counted in the FBA statistics.

The growth in the sheets direct or so-called "other" corrugated uses was at a 6.6% average in each of the last five years, three times that of actual box shipments, according to Waghorne's figures.

He said this month that he expects 395.2 billion ft2of US actual box shipments this year, with 98.7 billion ft2of waste and other uses.

"Non-box uses of sheets is growing rapidly," Waghorne said on one of his presentation slides during RISI's 18thbiennial International Containerboard Conference on Nov. 13 in Chicago.

The "other uses" corrugated sheets-influenced business is to equal 20-21% of box shipments in 2020, from about 16% in 2012, according to Waghorne.

'Growing flow to end users.'"There is a growing flow of sheets direct to end users," said one contact with an integrated system. "In addition to the traditional slip sheet (increasing due to plastics substitution), the tray business, and dunnage, we are seeing growth in the 'made-to-fit' business with a growing deployment of 'right-size' converting machines."

There are "various packaging applications where the end user can finish the sheet in their operations," another integrated company industry contact said.

"I do believe (sheet-to-end-user business) will grow exponentially as right-size packaging and box-on-demand type of machinery grows in the marketplace," the industry contact said.

A Northeast box maker said that "we have a few (end-users) that will order 5,000 (sheets) and finish off their own manufacturing runs by converting sheets into boxes."

"You can do more things like print or coat with a corrugated sheet at less cost," and it is also "more rigid and readily available," an industry contact for integrated system said, making his case for why sheets work for CPGs.

"I think that with growth in e-commerce and specialized internet sales, there is a demand for small-quantity specialized packaging," the contact added, that "will reduce logistic costs and waste. One lowers carbon footprint, the other lowers waste to landfill. I don't believe we designed packaging five or especially 10 years ago with those two things in mind."

 Amazonsaid more than 180 million products were ordered in the four days fromBlack Fridayon Nov. 23 throughCyber MondayNov. 26. Overall online sales were reported to increase 24% on Black Friday, vs Black Friday 2017 sales, and Cyber Monday sales were to increase 18% to $7.8 billion, making it the biggest online shopping day in US history, reports said. The National Retail Federation forecast 4.3-4.5% holiday sales growth, compared with an average annual increase of 3.9% over the last five years. Adobe Analytics forecast online holiday shopping growing 14.8%, up from 14.7% 2017 growth and 14.4% in 2016.