UK businesses suffer cardboard shortages due to ‘Amazon effect’

A more than tenfold rise in the price of cardboard since the start of the pandemic is sparking fears among small British companies that they will be unable to source boxes needed to send out products and parts to customers.

Demand from Amazon and other online sellers, alongside disruption at the border and stockpiling caused by Brexit, has led to a national cardboard shortage.

“You cannot get hold of new cardboard,” said Mandy Ridyard, finance director at Shipley-based aerospace manufacturer Produmax. “We are holding on to the boxes we have.”

Quack Snacks, which sells food pellets for wildfowl, began to experience shortages in December. “Where suppliers had always previously offered a next-day service, some box sizes were being listed with mid-January dispatch dates,” said founder Andrew Hemmings.

“We need to keep more stock to act as a buffer to any delays so there’s now hardly a space that isn’t utilised to store boxes.”

Simon Ellin, chief executive of the Recycling Association, which represents cardboard makers, blamed the “Amazon effect”. 

“There is a monumental increase in demand caused by the surge in online deliveries during the pandemic,” he said. “It’s a global shortage — not just the UK or EU — given huge demand from China. People are going around stealing cardboard.”

According to data from letsrecycle.com, the industry database, prices of old cardboard used to make new boxes rose from as low as £10 a tonne in January last year to up to £118 a tonne last month. But they have risen further since then, according to Ellin, reaching £140-£150 this month.

He expects shortages to continue until the potential reopening of non-essential stores next month, which might alleviate some of the demand from ecommerce. But the surge in demand has at least saved businesses in the sector, which had been struggling to operate in the commoditised industry.

Trade association the Confederation of Paper Industries said there was “a combination of market conditions that are proving extremely challenging, especially at a time when demand for sustainable packaging materials like corrugated cardboard are so high”. 

It pointed to a dramatic increase in online ordering, in particular before Christmas, leading to a jump in demand for corrugated packaging. Another factor was pre-Christmas stockpiling given the uncertainty around Brexit, while cardboard entering the UK had been subject to delays at customs. 

Supply of new cardboard is heavily dependent on the recycling of old boxes, much of which is carried out in the EU.

“There have been examples of significant [border] delays over the course of recent weeks,” the CPI said in a policy paper. 

“As a result of all of these developments, lead times for the industry have risen dramatically, increasing from days to weeks. Some customers have been unable to source sufficient boxes.”

Quack Snacks’ Hemmings said that while suppliers had been supportive and he had not seen dramatic price rises, “cardboard is mission-critical” because customers’ insistence on biodegradable packaging made it difficult to switch to alternatives.

Smaller businesses are far more likely to be affected than larger ones, which can place orders for packaging materials well ahead of time.

Victoria Betts, chief commercial officer at shoe retailer Hotter, said there had been “some challenges” last year, when the group was advised by suppliers to order further in advance than usual. 

But the situation had stabilised since then, she added. The group sources cardboard for 1.5m boxes a year, mostly from the UK.