One sign that ecommerce is thriving is the demand for packing materials. A new report reveals the demand is so great that companies that produce corrugated boxes and other packaging are expanding their industrial real estate footprint through heightened leasing and merger/acquisition activity to meet the increased demand.
Newmark Group, a commercial real estate services firm, found that nationally, nearly 407 billion square feet of corrugated product was churned out in 2020 as online orders spiked during the pandemic – an all-time high.
It expects demand to remain elevated, and said, based on current space utilization of top corrugated occupiers, it estimates that an extra 250,000 square feet of direct industrial space for every additional 1.0 billion square feet of corrugated product could be needed to accommodate annual growth.
The report plots out box consumption over time from 2011 – 2020, overlaying US corrugated box shipments (SF) with ecommerce sales.
It also lists suppliers (“tenants”), from Uline to Georgia-Pacific and Shorr Packaging, showing the growth of their new warehouse locations in square feet from 2020 to 2021 year-to-date.
The growth of ecommerce increased the need for certain types of packaging, including corrugated boxes, which represent more than 80% of online-order packaging, Newmark said.
You can find the report on its website, nmrk.com.
So are the prices for boxes, the suppliers I’m buy from have raised prices 20-30% in the last couple months IF you find them in stock.
I use recycled AMZ boxes and get $1 boxes from the Dollar store and Target.
Honestly, this shouldn’t be any big surprise at all if you have followed the news about new home construction where prices have gone through the roof (pun not intended). The prices to build a stick-built wood framed house are beyond horrific at this point. Fortune magazine says lumber prices are up 171% since Covid started:
https://fortune.com/2021/03/31/lumber-prices-2021-chart-wood-production-high-why-is-lumber-so-expensive-right-now-home-prices-data-update/
Cardboard boxes, paper and similar packaging are made using wood pulp as a base. If new wood is involved the prices are skyrocketing. If manufacturers can use recycled products, it will make a huge difference.
Probably this article focused on “Corrugated” boxes (instead of “cardboard”) because those make up about 80% of the boxes we use to ship things, but corrugated is essentially is a cardboard box with a “fluted” inner layer between two flat sheets that adds strength to the walls.