Containerboard represents a vital item for global packaging industry, which deals with the safety and maintenance of products during transportation and shipments. Over the years, the global containerboard market has been growing significantly mainly due to the rise of transport business, impacted by e-commerce shipments and increase demand for packaged food products. One major aspect of the market can be attributed to its focus on using packaging materials, which is based on renewable resources, and providing recyclable packaging solutions. In addition, containerboard offering the single most-recycled packaging material is widely used in packaging industry because of its versatility, lightweight, and durability.
Growing demands for package foods and ready-to-eat products have primarily pushed the significant expansion of the containerboard market, although it has wide applications in other industries such as consumer goods and pharmaceutical sectors. Increase in busy lifestyle of young populations and rise of working women drive the massive demand for packaged foods, which help saving their time for cooking. According to an official source, Brazilians are increasingly inclined towards the habit of dining out-of-home (OOH). In 2017, the OOH market in Brazil accounted for USD 11 billion, in which the purchase of food and beverage represented almost 50%.
As per a detailed report published by Growth Market Reports, the global containerboard market is anticipated to witness an expansion at a CAGR of 5.8% and reach USD 256.8 billion by 2027. The market was valued at USD 167.6 billion in 2019. In terms of volume, the market is projected to expand at a CAGR of 4.5% during the forecast period (2020-2027). For now, the ongoing COVID-19 pandemic poses a biggest challenge for the market growth and the prolonged closure of business operations of several manufacturers competing in the market have caused adverse impact.
Meanwhile, North America is currently occupying a major share of the global containerboard market while Asia-Pacific has emerged a key destination for the market in the next few years due to increase in development of industries and rise in the number of working populations. Among countries, the United States (US) is one of the major global exporters of containerboard especially corrugated containers and kraftliners; and the material and manufacturing costs in the country are relatively cheaper than other regions due to the rich availability of raw materials such as softwood trees. These trees such as pines and firs have long fiber and corrugated packaging requires long fibers to provide strength in it. Conifers, which are the common softwood trees, grow in the southeast US better than anywhere else in the world.
What is Containerboard and its Development History?
A containerboard refers to the substance used for manufacturing corrugated boxes known as cardboard boxes and is primarily used for boxes packaging. Boxes made from containerboard are varied in strength based on the combination of linerboard and different boxes are used for packaging different products. The three variances of the containerboard used for packaging can be illustrated as follows:
Single wall: two sheets of linerboard with corrugated medium in the middle
Double wall: three sheets of linerboard with two corrugated mediums in between them
Triple wall: four sheets of linerboard with three corrugated mediums in between them
Walls of corrugated boxes made with containerboard has two main parts: linerboard (or facing) and corrugated medium (fluted paper). The flutes in the corrugated medium are placed in form of connected arches that can support sheets of linerboards, which are used as the skin or facing of the package. Each side of the fluted material is glued to the flat paper liner during manufacture, which fixes the flutes in position and adds rigidity and stability to the papers. The main purpose for using corrugated boxes is to protect products including fragile items from breaking or ruining during the transport from one place to another.
The properties of the corrugated material can be examined on the basis of the types of paper used for liners. There are two main types of papers known as Kraft and Test liners. Kraft paper, manufactured from softwood trees, has both strong as well as easy-to-print quality due to its “virgin” fibers. The paper is primarily used for outside liners in producing corrugated boxes and packaging. On the other hand, test paper is a recycled material but has less strength as compared to Kraft and is commonly used for the inside liner. Each liner type comprises of two distinct layers; a basic layer is used adhesion and strength while a finer “cover” layer is used mainly for improved aesthetics and to aid printing.
It was in 1871 that the corrugated paper for packaging was used for the first time after an American Albert L. Jones invented the use of the paper for wrapping bottles and glass chimneys. In fact, a form of paper corrugation had been patented in 1856 in England but Albert Jones’ patent was the first that specifically proposed for using improved packing material. By the mid-20th century, the material had been in general use such as packing fruits and other farm products that extended the comfort of transportation from the farm to the market. With the introduction of different technological advancements and growing trade volume across the globe, the use of corrugated package has been widely adopted in various industries. The region’s sales volumes in industrial packaging are also continuously increasing over the past few years, reflecting higher box shipments and higher shipments of containerboard to the export markets.
COVID-19 Impact on Containerboard Market
The ongoing COVID-19 pandemic has crippled the global economy and affected almost all major industries ranging from consumer goods to transportation industries since the virus spread has forced business industries to shut their operations. With the emergency lockdown imposed across countries, the pandemic caused a drastic impact on the normal functioning of business organizations as it affected the global supply chain and commercial productions of various companies. Considering the emerging impact of the pandemic, Growth Market Reports estimates that the market is expected to witness a decrease of around 3.6% between 2019 and 2020 owing to the negative impact of COVID-19 pandemic on the containerboard market.
The pandemic, which was originated in Wuhan province of China in December last year, has brought a drastic change in consumer behavior and demand, purchasing patterns, re-routing of the supply chain, dynamics of current market forces, and the significant interventions of governments. Several companies across industries have declared insolvencies and many companies engaged in furloughing its employees to stay buoyant during the harsh impact of the pandemic.
However, the surge of online sale of retailers due to the closure of shops has brought some advantages to these companies of the containerboard market as the rise of online sales means the rise in the needs of corrugated packaging. One of the key manufactures of the packaging, a Canada-based Cascades Inc. claimed that the requirement of containerboard and corrugated packaging has been growing due to the rapid expansion of online retail industry during the pandemic. The company further added that it had plans to provide its wide spectrum of solutions beyond conventional packaging to meet the needs of the growing demands.
Segmental Outlook for Containerboard Market
The global containerboard market is broadly categorized on basis of several segments depending on material types, end-users, and regions.
On the basis of types, the market is primarily split into kraftliners, testliners, and flutings, while they are broadly categorized under material-based division as virgin fibers, recycled fibers, and the combination of the both.
The growing of kraftliner segment is supported by the rapid growth in the food & beverage industry worldwide. The segment is widely used for packaging food & beverages items since the material can provide a shield the products transported from the side-effects of extreme weathers during the cold as well as humid climate.
The fast growth of the online food industry is expected to boost the growth of the kraftliner segment during the forecast period. Online ordered food packers use kraftliner for packaging purposes due to its tear resistance, resilience, and elasticity.
Meanwhile, the virgin plus recycled fibers segment represents a key dominant in the market. According to Berg Mill Supply, an US-based recycled material supplier, the containerboard capacity in the country is estimated to account for a total of 11.6%, i.e. 4.45 million metric ton by 2021. For instance, in 2017, about 66% of the distribution of containerboard production in North America was of virgin + recycled fibers.
End-user industries of containerboard market include chemical, food & beverage, consumer goods, pharmaceutical, and electronics as they need sustainable, lightweight, and personalized packaging solutions to meet the growing demand for products. Among these industries, food & beverage is controlled a handsome share in the market and expected to witness a significant growth during the forecast period.
Rising the number of people opting for ready-to-eat foods due to their busy lifestyles have boosted the growth of the food & beverage segment. Demand for Packaged food is increasingly popular among working people as they are occupied with hectic life schedule. According to Napco National, a Saudi Arabian packaging firm, the rise of ready-to-eat (RTE) and grab-and-go meals are shaping the future of Saudi Arabia’s food and beverage packaging trends.
Food & beverage companies are increasingly adopting corrugated board packaging since these packaging can ensure the preservation of nutritional consistency, their texture, and taste of the products by avoiding from tempering and contamination.
As corrugated board packaging keeps moisture away from food products and can withstand long shipping times, it is increasingly being adopted by the food and beverage companies to offer better outcomes to customers.
Containerboard Market Regional Outlook
On the basis of regions, the market has been broadly classified into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.
North America is currently dominating the market due to the growing demand for the corrugated board packaging from various end-users industries mainly based in the US and Canada. The increasing number of shipments in the e-commerce industry in the region is also a significant factor for the increasing demand for containerboard.
According to the US Department of Commerce, the online retailers in the country generated USD 121.460 billion in the third quarter of 2018, a 14.3% increase, as compared that in the same period last year. Additionally, the retail value sales of packaged foods are also expected to increase by 4% in the US year-on-year, between 2018 and 2020, due to the increasing awareness, availability, and affordability.
Meanwhile, the US has been keenly developing corrugated board packaging based on recycled materials over the years. According to the American Forest & Paper Association, the US recovered 88.8% of corrugated containers for recycling in 2017 and more than half of the recovered fibers were used in manufacturing paperboard into making containerboard.
Meanwhile, Asia Pacific is expected to register a dominant share of the containerboard board market in the coming years since the region offers various growth opportunities to vendors. Rise in disposable income of the populations with a massive impetus from Chinese and Japanese markets are likely to play primary roles in achieving in a significant market growth in the region.
The increase of agricultural or farm products in the region is another reason for driving the market expansion. According to the US Department of Agriculture (USDA), diversifying consumer demands and emerging markets in the Asia-Pacific region offer massive opportunities for US dairy exports in markets abroad.
Moreover, many countries have sought to develop their market for the packaging and have established factories to do so. For instance, the market in Brazil is expected to grow at a significant pace during the forecast period due to the expansion of flower commercialization and packaging. In the United Arab Emirates, the Emirates Business Group-owned Ipack has opened up a mill factory, which is one of its first paper mill in the country and very few in the GCC, to produce paperboard packaging for aseptic filling use.
Key Players and their Competitive Strategies in the Market
The leading players in the global containerboard market include International Paper, Mondi Ltd., Smurfit Kappa Group, WestRock Company, Nine Dragons Paper (Holdings) Ltd., Oji Fibre Solutions (NZ) Ltd., Packaging Corporation of America (PCA), and Oji Holdings Corporation. These companies are considered as key manufacturers of containerboard based on their revenue, research & development (R&D) activities, regional presence, and supply chain management system.
Many of these players have timely engaged in various market strategies such as acquisition, new product launch, collaboration, and geographical expansion to enhance their business portfolios and market position.
Product launch and Plan
- In May 2020, Cascades Inc. announced the introduction of its product line for e-commerce, which provides a wide selection of personalized, innovative, and sustainable packaging options for businesses selling its products online.
- In mid-January 2018, McDonald announced that it set its target to ensure 100% of renewable packaging recycled, or certified sources with a preference for Forest Stewardship Council certification by 2025.
- In June 2018, Mondi Group completed the acquisition of Powerflute, an integrated paper & pulp mill, which was worth euro 365 million. As per the agreement, Mondi and Powerflute would operate an integrated pulp and paper mill in Kuopio, Finland and was initially signed in December 2017. The acquisition helped the former company to increase production capacity and broaden its containerboard product range and geographic reach.
- On January 5, 2018, WestRock Co. acquired Plymouth Packaging with an aim of strengthening the former company’s portfolio in business of containerboard production capacity and products range. The acquisition included the Plymouth’s ‘Box on Demand’ systems.
In June 2018, a major manufacturer of containerboard in the US, International Paper (IP) and World Wildlife Fund had entered into a collaboration to develop science-based targets for forests and advance forest restoration in Brazil. Through this expanded collaboration, IP demonstrates that investing in the long-term sustainability of natural capital makes economic sense by promoting responsible forest stewardship for future generations. International Paper sold around 13,844 thousands of short ton of containerboard in 2017.
To sum up, the containerboard market is offering a thriving business scope for the investors especially due to its eco-friendly nature. According to the US Environmental Protection Agency (EPA), paper and paperboard packaging made from containerboard accounts for nearly three-quarters of packaging materials recovered for recycling in the US. To be noted, corrugated boxes are made using 46% recycled material and are environmentally friendly and sustainable form of packaging as compared to other forms of packaging such as plastics metals, and others. This represents a key factor that can propel the growth of the market in the near future.