Corrugated and Solid Fiber Boxes

SIC 2653

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing corrugated and solid fiber boxes and related products from paperboard or fiber stock. Important products of this industry include corrugated and solid fiberboard boxes, pads, partitions, display items, pallets, single face products, and corrugated sheets.

Industry Snapshot

The United States is the world's largest producer of corrugated and solid fiber boxes, accounting for more than a third of total world volume in the late 2000s. Corrugated paperboard products are used to ship almost all of the nondurable goods manufactured in the United States and a majority of the durable ones as well. They face relatively little competition from alternative shipping methods.

Corrugated paperboard products have long accounted for the majority of U.S. paperboard container shipments, holding more than 60 percent of the total paperboard container market. Corrugated product shipments also held about 25 percent of the overall domestic U.S. packaging market, which included packaging made from wood, paper/paperboard, plastic, metal, glass, composites, and other materials.

The vast majority of corrugated products are used to package nondurable goods, such as food products. The percentage of corrugated products directed toward nondurable goods tends to rise during recessions since the number of high-ticket durable goods shipped, such as stoves and refrigerators, decreases.

Shippers and packagers of food products, the largest market for corrugated products, were expected to see the highest growth market for the corrugated industry. In addition, shippers were using more corrugated pallets to replace wooden ones because of concerns about costs and recycling.

One of the key trends in corrugated boxes in the late 2000s was recycling. Recycling relates to both the material used to make the boxes and how they are disposed of after use. Corrugated boxes are easily recycled and are biodegradable, which helps them compete well against plastic products among "green" consumers. Most corrugated products are unbleached, which exempts them from the controversies surrounding bleaching processes in the paper industry. Nonetheless, in 2005 solid bleached sulphate (used in pharmaceuticals and frozen foods) and unbleached kraft (for the beverage market) saw the strongest industry growth. More than two-thirds of corrugated products were recovered for recycling into new boxes or other paperboard products, which represented the second highest recovery level of any major consumable material (aluminum cans were first).

Dun and Bradstreet reported in 2009 that annual sales for the industry were $19.7 billion, with 114,660 employed by the industry. Top states in terms of revenue were Ohio ($4.3 billion), Texas ($4.2 billion), Georgia ($3.4 billion), and Illinois ($2.7 billion).

Organization and Structure

The corrugated box market is about 80 percent integrated. This means that 80 percent of all containerboard (the linerboard facing and corrugated fluting that together make a corrugated box) is not sold on the open market. Instead, it is delivered from containerboard mills to corrugated box plants owned by or affiliated with the same organization.

The value of corrugated and solid fiber box shipments reflect both the economic activity of the products shipped in them and the prices paid for boxes, which are typically pegged to the price of raw materials. These raw material prices tend to fluctuate widely. The U.S. corrugated product box industry produced all-time records in volume shipments during the 1990s. In 1996 shipments reached a record 376.2 billion square feet (bsf) of finished corrugated boxes, cartons, and shipping containers. By 1998 that total had reached another record, 402.6 bsf. Corrugated box and container product shipments accounted for 99 percent of the industry shipment total in 1998, while solid fiber boxes made up the small remainder.

Making Corrugated Board.
Corrugated medium and linerboard are made into corrugated board at box plants. Many weights, thicknesses, and combinations of liners and corrugated medium are used to make different types of corrugated board. In this process, flat corrugated medium board is softened with heat and moisture and passed between a set of corrugating rolls to form it into flutes. Adhesive is applied to the flute tip on one side of the medium. A separate, single face linerboard is then brought into contact with the fluted medium under heat and pressure to produce a single face web.

This web is conveyed to the double backer station, where adhesive is applied to the exposed flute tips and the double back liner is applied. The combined corrugated board is then passed over a series of hot plates to set the adhesive. Modern corrugating machines run at a variety of speeds, ranging from as low as 100 feet per minute (fpm) to as high as 1,000 fpm, depending on the type of corrugated board under production.

After this, the corrugating board is cut into individual sheets, or blanks, on a trimmer-cutter. The blanks are then fed to a printer-scorer-slotter or some other device, which turns the blank into a flat box that can then be opened and glued by the end user.

Recycled Corrugated.
Corrugated boxes have the image of being "environmentally correct" because they can be recycled into new boxes and other products. That image is largely justified, since the recycled fiber content of corrugated is generally the highest of any paper product. While corrugated products are often reused and the majority is recycled, some corrugated boxes do end up as waste in landfills.

To produce recycled linerboard and recycled corrugating medium, many paperboard mills use both preconsumer and postconsumer old corrugated containers (OCC). Preconsumer waste is corrugated materials such as off-rolls and trimmings from box plants. Postconsumer waste includes boxes that have been used for shipping and subsequently discarded.

Standard corrugated boxes are relatively easy to recycle since they are printed lightly and require little or no de-inking. The pulp made from OCC needs little cleaning and does not need to be bleached. Unlike many grades of recycled paper, OCC suffers a minimal loss in fiber strength and other physical properties. However, there is a limit to how many times fibers can be recycled. For example, Asian corrugated boxes, which have been recycled many times due to chronic virgin fiber shortages in those countries, tend to be weaker and less resistant to water than U.S. corrugated boxes. The fiber quality of Asian OCC is so low that many U.S. recycling mills exclude it from their processes.

Industry Growth Predicated on Other Industries.
The fortunes of the corrugated and solid fiber box manufacturing industry historically rise and fall with the shipping needs of other industries. In fact, some financial analysts use corrugated packaging as an indicator of overall economic activity. The robust U.S. economy allowed the corrugated box industry to grow the value of shipped products from $25.5 billion in 1997 to $31.8 billion in 2005.

Pricing of U.S. box production generally reflects the pricing of its underlying materials, most of which are linerboard and corrugating medium. In the early 1990s, domestic prices of corrugated boxes and their raw materials were quite low, shackled by the unusually long U.S. economic slowdown in the late 1980s and early 1990s, too much box-making capacity, and lower demand for boxes. The average price for corrugated boxes ranged between about $44 per thousand square feet (msf) and $50 per msf through the 1990s, depending on the economy, available capacity, and inventories. Prices for box materials also varied significantly during the 1990s. After reaching a peak of $480 per short ton in 1995, linerboard prices plummeted, and by 1998 were just $380 per ton. In 1998 the average price was $370 per ton. However, in 1999 linerboard prices began to increase slowly, and that recovery continued into 2000. Corrugating medium followed much the same trend, reaching a peak of $470 per ton in 1995 before dropping dramatically to $265 per ton by 1998. However, in 1999 prices began to move up, reaching $325 per ton in March.

Preprinted Linerboard.
One of the major recent changes in the corrugated box industry has been the growing use of preprinted linerboard. This product is used to make boxes with a white enamel surface that can be printed on with four-color graphics, while the rest of the box remains the same unbleached brown color. The main reason for the growth of preprint has been the growing belief by manufacturers that an attractive box can influence consumer buying decisions at the "point of purchase" in the store. Simply put, an attractively packaged product is more likely to be purchased than one in a brown box. Some studies have shown that up to 80 percent of buying decisions are made at the point of purchase, so the additional advertising from a colorful box can help influence that decision. Shipments of value-added, highly graphical boxes made from preprinted linerboard increased at a rate of about 7 percent annually through the late 1990s, compared with growth of 2 percent for all corrugated packaging products.

Competitors.
One of the market threats to corrugated packaging is flexible plastic films. These products, which are mostly stretch and shrink wraps, became more competitive with corrugated products in the late 1990s, at least in domestic markets. Moreover, some companies began to employ reusable plastic containers to ship products internally from one company location to another. The corrugated container industry responded to these kinds of market threats by producing lighter weight, higher strength products that reduced shipping costs for box users. In addition, features such as visual appeal of boxes made from preprint linerboard and improved resistance to moisture helped corrugated boxes compete in other areas. Paperboard remained favored over plastic for small multipacks, package shipping, and ice cream tubs.

The number of U.S. establishments engaged in this industry continued to decline from the late 1990s to mid-2000s as downsizing and merger activity helped consolidate the industry and eliminate some small operations. In 2005, according to the U.S. Census Bureau, the number of corrugated and solid fiber box manufacturers was 1,636, down from around 1,740 in the late 1990s. By 2007, this figure was down to 1,384 establishments.

Domestic demand for corrugated products remained relatively flat during the first half of the 2000s. The Fibre Box Association reported that shipments grew only 1.3 percent between 2005 and 2006, from 391.3 billion square feet (bsf) to 394.8 bsf. Global demand, however, remained healthy, particularly in Southeast Asia and India.

Current Conditions

According to the International Corrugated Case Association, in 2008 Asia accounted for 43 percent of the world's corrugated product shipments; Europe for 26 percent, North America for 23 percent, Central/South America for 5 percent, and Africa/Oceania for 3 percent. Global demand for corrugated products was expected to grow 4.4 percent annually between 2007 and 2011. Compared to a growth rate of 4.9 percent between 2004 and 2006, this represented a slight decline. China, however, was expected to see continued growth in this area, taking over the United States' position as the number-one producer of corrugated products.

The Fibre Box Association (FBA) reported in 2009 that U.S. corrugated manufacturing was a $24.7 billion industry. Other statistics from the organization promoted the sustainability of corrugated packaging. For example, corrugated was cited as the most recycled form of packaging, with 78 percent of all containers produced being recovered for recycling (a total of 25.2 million tons). Other data from the FBA showed that the average box consisted of 43 percent recycled fiber. In the environmentally conscious culture of the early twenty-first century, the corrugated manufacturing industry worked hard to prove its worth in this area.

Industry Leaders

Because so much of box production is fully integrated, the industry leaders in this category tend to be the same as the leaders in the production of containerboard. Some of the leading corrugated and solid fiber box producers in the late 2000s, included Boise Cascade LLC (Boise, Idaho), Packaging Corporation of America (Lake Forest, Illinois), Smurfit-Stone Container Corp. (Chicago, Illinois), Weyerhaeuser Co. (Federal Way, Washington), Temple-Inland Inc. (Austin, Texas), and International Paper Co. (Memphis, Tennessee).

America and the World

The United States was the number-one producer of corrugated products in the world in the late 2000s, followed by China, Japan, Germany, and Italy. Strong export demand for U.S. corrugated products helped keep the U.S. industry healthy in the late 2000s. According to a report by Supplier Relations US LLC, U.S. exports of corrugated and solid fiber boxes in 2008 were valued at approximately $1.2 billion, whereas imports were worth only $362.2 million.

Research and Technology

Much of the research and technology in corrugated box production throughout the 2000s focused on improved process control and computerized order entry and production scheduling.

One area of concern to researchers was twist warp, which is the loss of flatness, in linerboard when it is converted into corrugated board. This problem was relatively unknown until the early 2000s, when corrugating machines began to run at faster speeds of around 1,000 feet per minute. At these speeds, linerboard with twist warp can cause malfunctions on the corrugator. While paperboard producers focused on making operating changes to minimize the problem, more research was needed into the fundamental reason for twist warp in order to help solve the problem.

Another promising research area for corrugated products manufacturers involves recycling. Traditionally, manufacturers of boxes for applications where the box becomes wet (such as for shipping produce) used corrugated materials treated with chemical wet strength agents. Although these agents make the box resistant to moisture, they also make it almost impossible to recycle since it will not break down during the recycling process. However, a paper chemical manufacturer, Georgia-Pacific Resins Inc., researched and developed a wet strength agent that will break down during recycling, which helped expand the recyclability of many old corrugated containers.

Other research efforts were expected to focus on maximizing quality and minimizing cost as the U.S. corrugated box industry attempted to preserve its strong market advantages throughout the second decade of the twenty-first century.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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