How the Amazon Effect Impacts the Corrugated Industry

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March 21, 2017
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December 6, 2017
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How the Amazon Effect Impacts the Corrugated Industry

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Since May 2016 there has been a significant increased demand for corrugated products resulting in increased production output by containerboard mills, corrugators and box plants.  Last month Royal Containers’ box shipments increased over the previous October. Mills operated over capacity to satisfy growing demand and inventories dropped to the lowest levels in years.

The steady increase in demand for corrugated packaging is attributed to the growth of e-commerce retailing. This e-commerce retail boom is known as the “Amazon Effect”.

 

Why is this driving and influencing a growing demand for corrugated packaging materials?

The corrugated sector is facing two challenges due to the Amazon effect:

  • Record Demand: Corrugated is seeing an unprecedented demand that is expected to increase thanks to the Amazon Effect. For example, products made in Asia are packed in an attractive box, and then boxed again in North America before it can be shipped. Corrugated processors worldwide need to have the people and technology in place as this sector grows.
  • Material Shortage: Because consumer blue box space is so limited, many households wind up putting their excess corrugated boxes in their household garbage bags, which is then sent straight to landfill. As a result, there is less available recycled material for the packaging industry to meet increased demand resulting in higher costs.

Royal Containers, headquartered in Brampton, Ontario, has a long history of answering industry shifts by adopting sustainable innovations that balance changing consumer behaviour with environmental responsibility. In the era of online shopping, they’ve taken the lead to grow their business and innovate further using new technology.

“We’ve expanded operations to meet the growing demand for packaging,” says Kim Nelson, President & CEO of Royal Containers. “We recently acquired Rexdale Container Corporation to give us additional resources and shared knowledge that will benefit our customers. Next week we begin running a new high speed Bobst Flexo Folder Gluer (FFG) which will dramatically increase our production capacity and service levels.”

Another high speed FFG will be installed in May at Royal Containers’ London facility with further upgrades and improvements to their two production facilities in the works.   Both plants are running three shifts and support staff, sales and design resources have been increased and enhanced.

Royal Containers is going “all in” to continue as a leading Service provider in the Ontario corrugated packaging market.

Contact Royal Containers

 

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