[비즈한국] Mr. A, in charge of materials at a pharmaceutical company, is facing a 'box' emergency. The purchase price of shipping boxes for online delivery, which he used for selling health supplements like vitamins online, has skyrocketed. He used to buy boxes for around 100 to 500 won, but recently, suppliers sent quotes with price hikes, claiming that "a price increase of more than 30% is inevitable." Not only delivery boxes, but also the boxes used to package the products have all risen in price by over 30%.
Mr. A vented, "The prices of everything from product boxes to delivery boxes are rising quite noticeably. Even though superiors are telling me to find cheaper options, suppliers are all complaining that 'price increases are unavoidable.'"
Not just base paper, but also related materials and logistics costs are rising
The cause of the skyrocketing box prices is the shortage of domestic corrugated cardboard base paper. According to industry data, domestic corrugated base paper inventory was 152,760 tons this January, a decrease of about 40% compared to the same period last year (258,527 tons). It is predicted that stocks will decline further in April and May. Corrugated base paper is the core raw material for making boxes and accounts for most of the manufacturing cost. Excluding labor, the price of the base paper effectively represents the entire cost of the box.
The sharp drop in cardboard inventory is due to the suspension of operations at major paper mills. In Korea, the 'top 5 paper companies' produce base paper to supply to small and medium-sized box manufacturing companies, but two of these are currently at a standstill. A fire occurred at the Korea Export Packaging002200 Osan plant in Gyeonggi-do last February, and it is expected to take several months to return to normal operations. At the end of last month, a fatal accident occurred at the Asia Paper Manufacturing002310 Sejong plant, leading the Ministry of Employment and Labor to issue a work stoppage order. The company plans to resume operations after safety inspections and remedial measures.
Prices for various auxiliary materials are also rising. With the blockade of the Strait of Hormuz in the aftermath of the US-Iran war, the costs of printing ink, adhesives like polyzol, and packaging supplies like PP bands and wraps have risen by nearly 20-50%. Since bulky delivery boxes are usually included in the product cost, the significant rise in diesel prices has also added to the burden of logistics costs.
The CEO of a small to medium-sized business that supplies delivery boxes to firms explained, "For boxes used to pack bulky items like TVs or furniture, even if you fill a wing-body truck, the total value of the inventory is less than 10 million won, so the profit margin is naturally limited to just a few hundred thousand won. With diesel prices rising, margins have shrunk drastically, forcing us to raise prices." He added, "We are in a supply-demand imbalance, similar to the corrugated cardboard crisis during the 2020 COVID-19 pandemic."
Plastic instead of boxes? Plastic prices are up over 50%
Small and medium-sized e-commerce companies and small business owners are seeking alternatives as their profits decline. Usually, if the unit price is low and margins are small, choosing plastic packaging instead of boxes for non-fragile products was an alternative, but now plastic prices have also skyrocketed.
The price of HDPE (high-density polyethylene), a raw material for standard garbage bags, is expected to rise by about 1 million won in two months, from the level of 1.4 to 1.5 million won per ton in February. That is a sharp increase of over 50%. Given that it takes about 25 days for raw materials from the Middle East to reach Korea via the Strait of Hormuz, supply disruptions are also feared starting this month. For companies that were shipping via plastic bags, this is even more of an emergency.
This is where concerns are emerging that if the blockade of the Strait of Hormuz is prolonged, a delivery box crisis starting with boxes and plastic packaging could fully materialize. The CEO of a box supplier predicted, "If we deliver at existing supply prices, we face a loss of more than 20%, and if the prices of boxes or plastic rise, it will ultimately affect the increase in product prices for consumers in the medium to long term."