E-commerce is powering paper packaging demand, but its impact will weaken over next 5 years


Box reduction, other trends will dampen "e-commerce boost" for corrugated, forecasts new study

Boston, July 15, 2019 (Press Release) – Amazon’s latest Prime Day highlights the importance of online retail sales to the modern economy. Shipping boxes from Amazon and other retailers symbolize e-commerce – and they also represent one of the most important sources of demand growth for containerboard and corrugated packaging in the US and Canada. For the first time, the “e-commerce boost” has been quantified by The Impact of E-commerce on North American Paper Packaging Markets, a new Special Study from Fastmarkets RISI.

“E-commerce and mail order retail uses about 7 times more corrugated per dollar of sales than traditional retail logistics,” said Derek Mahlburg, Fastmarkets RISI Senior Economist and lead author of this all-new study. “So as e-commerce has grown at an average of 18% annually since 2000, it’s become a significant driver of corrugated demand growth in North America,” Mahlburg said.

US corrugated box shipments rose 1.9% per year in 2015-2018, the best run of sustained growth for the sector since the 1990s.

The study introduces a customized definition of e-commerce retail. This metric includes the mail order sales that are also shipped in boxes, while excluding items like online-negotiated car sales that distort headline e-commerce statistics. These e-commerce/mail order sales made up about 17% of retail spending in 2018, but accounted for more than half of all corrugated box shipments to the US retail sector.

The relatively intense usage of corrugated in e-commerce is a boon for the paper packaging industry, but it also creates a strong incentive for online retailers to pursue alternatives to corrugated packaging. Efforts to reduce paper packaging use, combined with other factors, suggest that growth in the “e-commerce boost” for corrugated will weaken over the next 5 years.

“From overbox reduction to plastic mailers to retail-store fulfillment of online orders, the biggest e-commerce companies are working to lower the intensity of their box usage, especially since the corrugated and containerboard price increases of 2017-2018 have drawn attention to this cost category. Along with maturing growth in overall e-commerce sales and the US economy’s apparent exit from peak growth, these factors point towards slower e-commerce-driven paper packaging demand growth through 2023,” said Mahlburg.

For the first time, The Impact of E-commerce on North American Paper Packaging Markets establishes metrics that quantify how e-commerce has affected corrugated packaging demand in the US and Canada. These indicators for box intensity, along with other relevant factors, support first-ever forecasts of the evolution of packaging demand in the e-commerce space.

Learn more at risi.com/e-commerce_study

About Fastmarkets RISI

Fastmarkets is the leading price reporting, analytics and events organization for global commodities markets, including the forest products sector, as Fastmarkets RISI. Businesses working in the pulp and paper, packaging, wood products, timber, biomass, tissue, and nonwovens markets use Fastmarkets RISI data and insights to benchmark prices, settle contracts and inform their strategies worldwide. Along with objective price reporting and industry data, Fastmarkets RISI provides forecasts, analysis, conferences and consulting services to stakeholders throughout the forest products supply chain.

About Fastmarkets

Fastmarkets is the leading price reporting, analytics and events organization for the global metals, mining and forest products markets. Fastmarkets’ core activity in pricing drives transactions in commodities markets around the world and is complemented by news, industry data, analysis, conferences and insight services. Fastmarkets includes brands such as Fastmarkets MB, Fastmarkets AMM, Fastmarkets RISI and Fastmarkets FOEX (previously known as RISI and FOEX, respectively). Its main offices are in London, New York, Boston, Brussels, Helsinki, São Paulo, Shanghai, Beijing and Singapore. Fastmarkets is a part of Euromoney Institutional Investor PLC, a listed company on the London Stock Exchange. Euromoney is a leading international business-to-business information group focused primarily on the global commodities, banking, and asset management markets.

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For Press Enquiries, please contact:

Alan Petrillo
Marketing Manager/Special Studies

P: 781-778-7592
E: apetrillo@fastmarkets.com

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