Category Archives: Paper

Corrugated Box, Packaging, Paper

Why The Specialty Paper Price Increase

Is it just me, or did everyone stick their head out their corporate window around the end of last year and yell “Price increase 3%-5%!!!”. If you are reading this post, than you are all to familiar with getting these emails from your suppliers. We put together over the last several months exactly what we have seen and heard from our suppliers and customers and here is our state of things below.

 

The main drivers we have seen that attributed to this increase are the following:

Truck Driver Shortage:

  • This has been an issue for several years with some estimates putting that number at 100,000 for 2017 (www.truckinginfo.com/channel/drivers/news/story/2016/12/state-of-trucking-for-2017.aspx )
  • During periods of strong demand this creates a large imbalance driving up prices
  • The current load to truck ratio is 7.2 to 1 ( on average for every 1 truck available there are 7 loads that company or driver can select from)The current average cost per mile paid to trucks is $2.10 the highest in over 3 years
    ELD Data Log Mandate ( begins 12/18
  • Transit times will be extended as trucks will now only be able to legally run 450-500 miles per day on average.
  • One day transits become two days, two day transits become three days and so forth.
  • Reduced Capacity ( even more ) fewer miles being run by some carriers and other carriers will leave market all together because they can’t or won’t comply
  • Dynamic Rates – Examples above will drive prices up even further for 201

In short , carriers and trucks are King right now. Those that can capture capacity are paying for it. That is why you’ve seen a significant increase in rates and why we believe they will only continue to rise in 2018.

Natural Disasters:

  • Three Hurricanes devastated Houston, Southern Florida and Puerto Rico, Creating massive demand for inbound trucks and supplies at any price.
  • This pulls from an already depleted pool of available capacity and creates an additional imbalance in the national trucking network.
  • Increasing rates considerably to haul products into areas affected by the Hurricane and shifting normal traffic flows.
  • Oregon and California Forest Fires causing road closures and additional network disruption tightening an already seasonal shortage in the Pacific Northwest.

NBSK Pulp:

  • This is main pulp used for specialty base paper. This past December this wat $1,185/ton. April pricing is $1,280/ton. (RISI Published pricing for NBSK). After speaking with several mill reps and buyers, they are not seeing a quick end to these increases.
  • The mills have quite a few levers they can use to raise pricing, these levers are the ones mentioned above.
  • The demand for pulp and the Amazon effect is real. When you go out to get that package today on your stoop from Amazon, take note that it is almost always in a box. The MF (machine finished ) and MG (machine glazed) grades are extremely in demand for making corrugated boxing.
  • Several mills we deal with, are not taking orders due to their paper machine assets are booked solid – great problem to have if you are mill, not so good for the rest of us. Right now we have customers calling to see if we can offer lower pricing, only to find out, everyone they have spoke to, has also raised prices. With this we have seen customers asking to review their current material and see if their is an alternative, like using a film for their release liner. In some cases their can be some savings.

If you would like to chat further on the state of things or have us review your offerings please send me an email, would love to here from you.

Corrugated Box, Packaging, Paper

US Box Shipments Outpaced GDP – Why This Is Big News

2016 was a big milestone in the production and manufacturing of container-board and corrugated boxes.  According to Vertical Research Partners, corrugated box shipments in the US expanded by 2.1% on an annual basis, to 376 billion square feet, surpassing the country’s GDP growth of 1.6%.

This is big news when you look at the trend over the past years.  From 1984 until 2016 box shipments grew by just 1.1% per year, when the US GDP for the same period averaged 2.6%.  Ok great, so everyone would lump this together in the paper space and say, with paper usage falling behind over the past years, and plastic film has taken over in packaging, it would make sense box capacity has slipped.

But just hold on their folks, that is why this milestone is big news.  And now the Ahh Haaa Moment – wait for it, wait for it —– Amazon!!.   When was the last time on your front stoop was a plastic box of your Amazon goods – let me answer – never.  That’s write – corrugated box.  And I know you are saying, there is just no way, that with the takeoff of Amazon it signal handily increased this number past the GDP.

Well it is not 100% Amazon, but they are the main factor.  The other driver is eCommerce is common place today, everything is shipped in a box.  So is this just a blip or are we in a trend?  Data so far this year points to a trend.  US box shipments are up 2.8% year-on-year from January until July.

The other key point to watch here if you are an Investor, maker or supplier is pricing of the material.   In the past quarter-century, the global corrugated box industry has doubled and right along with this has been the need for OCC – old corrugated containers.

So just follow me for a second here.  80% of global containerboard capacity is predicated on the use of recycled fiber.  Meaning rarely is virgin soft wood used to make corrugated boxes.  Here is the interesting part.  With the recycling of corrugated boxes, the fibers break down so they are not as strong, so it is not like we have this endless supply.  After a couple of cycles, the material is no longer able to be used.

What we are seeing now is we are starting to use all of the recycled corrugated box material in the market, and we are starting to see virgin Kraft being used to fill the void.  The concern here is the regions with this attractive softwood trees for containerboard production are limited.  As a result, global corrugated box prices could rise a bit faster than inflation.

We at Cheever have seen these requests from new and existing customers asking for different coatings, colors and textures.  Definitely an exciting time to actual be in a growth mode when we are talking in the paper space –  this time around we are ok being “boxed” in..

Food Packaging, Packaging, Packaging Film, Paper

Steady Growth Forecast for Global Specialty Paper Market During 2017 to 2027

The global speciality paper market is estimated to be valued at nearly US$ 31 Bn in 2017 and is projected to reach approximately US$ 54 Bn by the end of 2027.  Based on end-users, packaging & labelling industry is expected to remain dominant.

“Sales of specialty paper will reach nearly 25000 thousand tons in 2017, and this number is further estimated to exceed 40,000 thousand tons by 2027-end, according to a report by Future Market Insights (FMI).

FMI’s report projects the global specialty paper market to register a steady 5.2% volume CAGR during the forecast period 2017 to 2027. The market is estimated to exhibit an absolute $ opportunity of US$ 21.59 billion during the forecast period.”

Learn more about the major drivers in this article from PaperAge.

Packaging, Packaging Film, Paper

First Modern Ag Residue Paper Plant in NA Under Construction

Making Paper out of Wheat Straw – the first modern paper mill is officially under construction in the sate of Washington to make this happen.

“On September 27 FeedStock (Chicago, Ill., USA) reported that for the past 15 years, environmental not-for-profit Canopy (Vancouver, Canada) has been advocating making paper from commercial agricultural residue a reality. Columbia Pulp, the first modern mill of its kind, is now slated to make pulp for paper and packaging out of wheat straw; it is now officially under construction in the state of Washington.

By securing the support of large consumer corporations and creating focused demand, Canopy claims it has helped position straw papers and packaging as a strong alternative to products made with virgin tree fiber. Through Canopy’s Second Harvest initiative, corporations such as Staples, EarthColor and more than 100 fashion brands have expressed clear interest in buying agricultural residue paper, packaging and/or textiles as they become available.”

Read more about it in this article from Naylor Network

Food Packaging, Packaging, Paper

What Is Driving Growth in the Specialty Paper Market

The Global Specialty Paper Market is expected to grow by 5.7% from US$31 Billion to US$54 Billion by 2027, according to July’s PaperAge magazine.  Driving this growth is more convenient and lighter packaging, tea bags, security labels and sustainability.

Lighter Packaging

Packaging is always about protection and transport, but it is the promoting of the shape, color, texture and even smell that makes thing move off a shelf.   Specialty coated papers provide better performance, lower weight, less scope of contamination, increase in shelf life of products and all while enabling seamless transportation handling.   In Western Europe they have seen growth in pouches, bags, wrapping and paper based flexible packaging.

Its Tea Time!

Europe being one of the largest consumers of tea has seen an increase driven by “packet tea”.  Tea bags have a low market share in the region, but the demand has by taking off due to tea bags made of specialty paper and the fact that specialty paper is biodegradable helps promote the environmental side of this paper.  From non-woven materials to lighter filter papers has played a part in this.

Labels Stop Counterfeiting

The world has started to take notice of the ease of certain items can now be counterfeited and more importantly with the Internet sold at a pace that has never been seen before.  Working to stop this dead in its tracks are QR code and NFC technology used in labels.  By having these codes on merchandise, has provided the ability to make items unique. While providing the consumer with a mobile app on their phone, they can easily scan this code that proves it is not a fake.  All this is due to the various specialty papers that been showing up in label’s, a good example of this is Johnnie Walker Scotch with its mobile app and label of authenticity on each bottle.

Sustaining This Growth Going Forward

An example of this is the increase of water-based barrier coatings, as well lightweight and special performance coatings.  This is all been due to the constant research and development in the enhancement of specialty papers.   Stemming from this work we are now seeing high performance composites, biodegradability and nanomaterials all starting to make their way into the market.   We at Cheever have been working with a local mill that is using Nano Cellulose fibers to produce a specialty parchment like paper without having to use the harsh chemical’s that are used to produce parchment paper.

Ultimately it has been the consumer pushing for these changes and we are now listening and making products for these end-user preferences.  It is an exciting time for the Specialty Paper Market and we at Cheever can’t wait to embrace this growth and change. Feel free to chat with us what you are seeing in your markets, we would love the feedback.

 

Paper

Cheever Specialty Paper & Film Conversion Chart

At Cheever Specialty Paper & Film we are always looking for new ways to provide the best service to our customers.  Our services include designing, sourcing and inventorying specialty paper, film and tape for the manufacturing and packaging industries, as well working with customers to solve problems that require a custom solution.  The latest innovation we have developed to meet our customers’ needs is a dimensions and dollars conversion chart.

The Cheever dimensions and dollars conversion chart was developed to easily convert different sizes and weight of paper.  This is important as basis weight, which describes the density of a specific sheet of paper according to how many pounds one ream weights at its basic size is only used in the United States.  One ream of paper is typically about 500 sheets of paper.  Other countries around the world measure this using the metric equivalent, which is grammage weight.   Grammage weight is the weight of paper in terms if grams per square meter.  It measures the same thing as basis weight, but does not consider paper density or basic size.

Another form of paper measurement is M Weight.  This refers to weight of 1000 cut sheets of paper.  M weight is useful for paper suppliers because it is always consistent with a specific paper size, which makes calculating shipping charges easier.  Many times this information needs to be converted into different units of measurement like lbs., linear foot, linear yard, and square yardage among others.  Once this conversion is made, it is also important to know how much it will cost per this unit of measurement to order.

Our conversion chart makes easy this process for you.  With this chart no longer will you have to do all of the equations to find out the information you are looking for each time you are looking to order new products.  For more information about this chart, and how it could benefit you, please reach out to our team.