Few things are as ubiquitous today as the humble cardboard box. Reliable, durable and easily transported, corrugated boxes have been around for over a century. However with longevity comes challenge—real innovation in such a commodity space, if possible, demands novel thinking.
An astonishing 95% of all products in the US are shipped in corrugated
Corrugated boxes are widely used for protective packaging of almost anything. In addition to protecting merchandise during transportation, corrugated packaging can be printed with various designs to enable effective product marketing for display in retail environments. The environmentally friendly image of corrugated boxes as a renewable resource and high rates of recycling and reusability have contributed to their widespread use in shipping and transportation of goods.
The industry is doing well
In the U.S. the manufacture and production of corrugated materials is a $28 billion industry. Over the last two decades the industry has seen a significant amount of consolidation as companies act strategically to protect proprietary trade secrets and obtain new technologies through the acquisition of smaller rivals. Industry consolidation is so rampant that twenty years ago, the top four players accounted for only 37% of the domestic corrugated supply market. By 2013, the top four producers were responsible for 75% of the same market. This “big fish eat little fish” type of behavior is indicative of the state of technology innovations within the corrugated space. In a commodity-based industry, driven by slim profit margins, highly susceptible to macroeconomic swings in GDP or manufacturing activity, corrugated suppliers continually seek high levels of vertical integration, in an effort to get a leg up on the competition. Major corrugated producers like International Paper are deeply integrated. They own the existing supply chain including the land and timber required for raw materials, the paper mills making kraft paper and the converting plants required for producing the final corrugated carton.
What does this mean for end-users of corrugated?
While integration benefits the corrugated suppliers by providing greater control over the value chain and increasing competitive advantage over smaller, less integrated suppliers, it has a deleterious effect on the pace and quality of new innovations, especially those relevant to the end consumer. Competition is a key driver of innovation as companies routinely seek to differentiate themselves from their competitors. When competition is eliminated and a monopoly is created, innovation is stifled and technological advancement stagnates. In the case of corrugated manufacturing, a recent search of the patent landscape shows the vast majority of new patent applications are primarily focused on new methods and processes to increase manufacturing efficiencies and lower production costs, rather than designing new and improved functionality for corrugated materials. The lack of focus on the needs and technical requirements of the end-users of corrugated, and the stranglehold that producers have over the entire corrugated supply chain, serves as a clear indicator of the need for disruption within the corrugated packaging industry.
But wait, isn’t corrugated already the perfect packaging material?
Corrugated is strong, inexpensive renewably sourced and can be readily recycled. These are a few of the properties underpinning the dominance of corrugated seen in today’s packaging applications, but it is not a perfect material.
For example, corrugated boxes are routinely stacked in warehouses, distribution centers and trucks. In all cases stack height and stability have cost and safety implications. The height and stability of a stack rely on the Edge Compression Strength or Edge Crush Test (ECT) of the corrugated board. Changing relative humidity of the environment has a negative impact on the stiffness and integrity of the material and resultant strength of the box. In fact, under cyclic humidity conditions the lifetime of a corrugated cardboard box is one fifth that of a box exposed to constant humidity levels. In real world transit applications, goods may be transferred between environments multiple times before arriving at a final destination. The inevitable exposure to changing humidity levels results in a loss of strength, collapsing stacks and damaged/lost goods, the costs of which are transferred to the end users of corrugated. To mitigate these losses, an alternative material, lightweight and impervious to the environmental fluctuations is required.
The truth behind corrugated recycling—it’s really good, but not great.
The environmentally-friendly image of corrugated paperboard has contributed significantly to its widespread use in the transport of goods globally. Great strides have been made in developing methods and processes to improve the recoverability of old corrugated containers (OCC) for use in new cardboard boxes. In 2012, 91% of the corrugated packaging used in the United States was successfully recovered and used in the manufacture of new paper products, though only 50% of it went into the production of new corrugated containerboard. This is because the recycling of OCC to pulp is hard on the cellulose fibers from which corrugated is made—they break and shorten and containerboard made from them is less strong. Materials made from 100% recycled sources yield low grade product used in less demanding applications such as interior packaging, newsprint and other paper products. To counter this the manufacturing process typically uses at least 40% virgin fibers (direct from trees) in order to provide the requisite material strength. Additionally, the recycling process is extremely labor and energy intensive, and the final product may not fully meet the technical requirements of the end users.
How then do we innovate?
Given the state of corrugated manufacturing and the control that suppliers have over the industry, the fastest way to implement new innovations would seem to be to work directly with producers to target new and improved product functionality. Working within the existing supply chain should enable new product innovations to be developed rapidly, leveraging the scale and manufacturing expertise of large producers to bring improved corrugated packaging materials to market and make large scale impact. Close interaction between manufacturers and corrugated end-users would be necessary to ensure that any new innovations are relevant to the challenges that consumers currently face with existing paper-based packaging.
However, the economics of the situation are not in favor of the end consumer and supply-chain inertia is great. Engineering new product innovation can be done, but putting it into an existing capital-intensive supply chain is not cheap, hence a major challenge is the capital investment required by corrugated producers to implement novel innovations. Further compounding the issue is that due to the limited options consumers have when it comes to sourcing inexpensive secondary packaging suppliers have no immediate motivation to invest in anything but their own cost-reduction initiatives.
In spite of this dynamic, we are seeing small entrepreneurial efforts like GreenBox and the Rapid Packaging Container. In cases such as these innovative designs seek to enhance the functionality of existing boxes made from corrugated materials, thus increasing the value proposition to end-users.
Thinking even more outside the box
Thinking functionally, boxes do four things for us: they contain things (think verb containment rather than the noun container), they protect contents from various threats, they enable ease-of-handling things and they communicate information. Real out-of-the-box thinking starts with these fundamental functions, recognizing that we probably need to still provide for those functions, but maybe we don’t need to do it with a rectangular prismoidal box that engages the entire supply chain we currently know.
A radical innovation would be to reinvent the supply chain, or parts of it. For example, eliminate corrugated materials altogether and contain/protect/enable/communicate via different mechanisms, or the same mechanisms with new materials. The development of novel materials which circumvent the common disadvantages of corrugated materials, while retaining their lightweight and sustainable characteristics, would create a significant disruption in a stagnant industry. Already we are seeing a gradual shift towards the use of Reusable Plastic Containers (RPCs) to transport certain goods such as fruits and vegetables. These containers provide superior protection by means of greater stacking strength, and enhanced durability, remaining impervious to changing environmental conditions. The ability to easily reuse an RPC multiple times dramatically changes it’s value proposition, reducing its carbon footprint without requiring the construction of an entirely new box.
New material startups like Aeroclay, UFP Technologies, Ecovative and Biome3D are all actively seeking to disrupt traditional packaging methods with the development of new, innovative materials, sustainably sourced with an emphasis on biodegradability. One particularly exciting example is the plant-based bioplastic designed for use in 3D printing applications. This flexible thin-film material is food safe and has excellent thermal resistance and is completely biodegradable making an interesting candidate in the hunt for alternative packaging materials. The rise of automated 3D printing in conjunction with molded fiber packaging and these new, sustainable materials points towards a promising future for the packaging industry.
We can and should try to innovate the commodity
Corrugated paperboard materials were invented in the late nineteenth century, and their use as transport packaging materials took off at the beginning of the twentieth century. Most innovations since, have been incremental. The corrugated medium is a mature technology sitting at the very top of its technology S-curve—the focus is on production cost rather than improved overall box value. In order to provide greater value by addressing the demands of 21st century consumers, and compete in today’s rapidly changing economy, disruption and the leap to a new technology S-curve is not only required, but essential.