First it was toilet paper. Then it was processors and other silicon. Now it’s cardboard. (And there’s a whole lot of other stuff in between.)
The latest kink in the planet’s ever-gnarled supply chain is one that is sending retailers, shippers, and consumers all scrambling. Cardboard supplies are unreliable, as are those for other packing materials like paper and plastic. And what is available costs more, with loads of companies passing the increased expenses to customers.
Many of the cardboard-producing paper mills around the world shut down at different points during the COVID-19 pandemic. While plants have come back online, they’re still scrambling to fill a backlog of orders.
Meanwhile, consumer shopping habits altered by the pandemic are also a factor. With most of the world having experienced some sort of lockdown since the beginning of 2020, homebound shoppers have turned to Amazon and other online outlets in increasing numbers for life’s necessities.
Complicating the situation is last winter’s deep freeze that knocked several power plants in Texas offline for days. With no power, refineries were unable to make plastics used in shipping materials. That, in turn, led manufacturers and shippers to rely more on other products—like cardboard.
“The types of materials that would be key and the raw materials that go into them—polyethylenes, polyurethanes—we’ve seen the cost of those raw materials surging to the tune of 50 percent year over year,” Vipul Shah, the chief product officer of Next Trucking, a logistics technology startup, told NBC News. “The story for packaging is the same.”
With shipping behemoths like Amazon able to secure supplies by virtue of their size and massive bankrolls, the rest of the world is facing higher prices and short supplies.
“Someone like Amazon is obviously going to be at the front of the line to get their share of capacity, whereas these smaller businesses are at the back of the line. They don’t have the ability to absorb these costs as easily,” Andrew Hogenson, the global managing partner of consumer goods, retail and logistics at Infosys Consulting, told NBC News. “Whereas smaller- to mid-sized businesses are going to be stuck or have to pay exorbitant prices.”