Over the past year, the entire paper and packaging industry has felt the ripple effects of rising input costs to produce their products. The price of energy, natural gas, shipping costs, and chemicals have increased so dramatically that paper and packaging companies have raised the prices of their goods multiple times. Some paper mills have even shuttered their doors due to escalating prices. “The paper industry has been in turmoil with constant cost increases,” said Roberto Graziani, owner of Graziani Packaging. “We can’t go on like this; companies are at risk of failing.” Despite a significant reduction in consumer demand since 2019, the price for wood pulp is up 25% this year to $250 a ton and is expected to increase. Meanwhile, DAT Freight & Analytics data shows that truck capacity remains tighter than last year, with the national load-to-truck ratio hovering at 5.26, more than two times higher than in 2020.
With all of these external pressures affecting the profitability of companies in the paper and packaging industry, shippers are looking for ways to help optimize their supply chain and source truckload capacity that helps lower their transportation costs.
How much do Paper & Packaging Companies Spend on Transportation?
According to a FreightWaves report published in 2019, the top five paper and packaging companies own a combined 75% of the U.S market force in the paper and packaging industry. The report concluded that if these companies spent, on average, 10% of their total revenue on freight expenses, then their combined costs spent on logistics would exceed $7 billion annually. The true costs are probably far greater when factoring in things like economic inflation, elevated fuel prices, and the continued global trade disruptions caused by the global pandemic.
Even a 1% cost reduction on transportation could help small to medium-size paper and packaging companies reinvest their funds into areas that could help expand their business.
What makes Paper & Packaging Logistics Different from Other Industries?
Nearly every business worldwide relies on paper and packaging companies. Just looking around your immediate surroundings, you can find something that is either made of paper, packaging, or was shipped in a corrugated box. Industries like food and beverage, cosmetics, and pharmaceuticals wrap their products in packaging materials. In 2018, the EPA reported that the U.S. produced over 41.9 million tons of paper and paperboard containers (juice boxes, frozen food boxes, and department store boxes). Paper and packaging are resources vital to everyday life. Managing the logistics of P&P supply chains is therefore crucial, as most companies cannot afford delays to their time-critical shipments.
The Benefits of Using 3PLs for Paper and Packaging Truckloads
Modern freight brokerages specializing in paper logistics offer shippers the experience, technologies, and carrier density necessary to handle complex supply chains. Paper and packaging companies operating in North America often utilize transportation providers who offer cross-border services into Mexico and Canada. One of the many benefits of using 3PLs for paper and packaging companies is their ability to provide dedicated service with a network of carriers. This provides the type of coverage paper and packaging companies usually look for to ensure customer orders get shipped on time. Some 3PLs also provide shippers with customizable online platforms and technologies designed to specifically help optimize transportation networks and provide tracking visibility on all shipments.
Digitally-enabled freight brokers can also provide paper and packaging companies with the following solutions:
- Optimized routing guides based on current market conditions, which cuts miles, time, and detention costs.
- Provide digital freight invoicing to help eliminate paper waste.
- Customizable APIs that connect directly into your existing systems.
- TMS enabled visibility that provides shipment updates with a touch of a button.
- Data analytic software designed specifically to reduce inefficiencies in your supply chain.
Count on Wicker Park Logistics to help Streamline your P&P Business
Each day, paper and packaging companies depend on Wicker Park Logistics to service their U.S. domestic and cross-border loads into Mexico and Canada. Their dense carrier network combined with state-of-the-art technology provides the type of coverage P&P businesses look for when choosing a carrier partner. Whether you are shipping bulk, palletized, or bales of product, Wicker Park Logistics offers dependable service and visibility to ensure your time-sensitive freight delivers on time. Wicker Park Logistics provides end-to-end solutions designed to help paper and packaging companies reduce transportation costs and optimize their supply chains. Contact an expert at Wicker Park Logistics today!