Written by Jan De Roeck
Marketing Director, Esko
It was one of those rare Belgian summer evenings—warm, golden, and perfect for a Long Drink on the terrace. As the sun dipped below the horizon, I found myself scrolling through trade press articles and market reports on the folding carton industry. What started as casual reading quickly turned into a deep dive into some compelling—and slightly concerning—data.
The folding carton industry has been riding a wave of volatility. The COVID lockdowns triggered a surge in consumer spending, which in turn boosted carton volumes. But as the world reopened, inflation took center stage, dampening consumption and dragging carton shipments down with it.
That’s a logical pattern—folding carton production mirrors consumer behavior. But what’s less logical, and more disruptive, is how market dynamics are evolving.
A statement in the 2024–25 Trends Industry Outlook and Market Data Report by Fastmarkets RISI caught my attention: “On the pricing front, the situation is somewhat challenging, particularly for independent converters, mainly due to cartonboard prices consistently outpacing actual folding carton prices for several years.”
That’s a red flag.
Let’s unpack the drivers behind this squeeze.
1. Raw Material Costs Are Rising Faster Than Product Value
Between 2018 and 2023, the price of boxboard—an essential raw material for folding carton production—grew at an average rate of 7.9%. This isn’t just a minor uptick. Boxboard is the highest cost contributor in folding carton manufacturing, and its steady rise puts pressure on every converter’s bottom line.
Meanwhile, the average value converters receive for a ton of folding cartons only rose 6.8% over the same period. That’s a gap that compounds over time.
2. Volume Is Flat, But Costs Keep Climbing
Post-pandemic, consumer caution has led to a decrease in carton shipments. The industry is seeing a flat average line in terms of volume. So, while you’re paying more for raw materials year over year, you’re not shipping more cartons—and you’re not able to raise prices to offset the cost increase.
Amid these economic pressures, there’s a positive note coming from the shift away from plastic packaging, driven by environmental sustainability considerations. Brands and retailers are under increasing pressure from regulators and consumers alike to reduce plastic use and embrace more sustainable alternatives.
Folding cartons, with their renewable and recyclable profile, are well-positioned to benefit from this transition. But capitalizing on this opportunity requires agility, innovation, and operational excellence. And we don’t see the impact thereof (yet) in the volume shipment data.
3. Profitability Is Under Threat
Even if raw material isn’t 100% of the cost of folding carton production, this imbalance between input cost and output value is unsustainable. Over time, it erodes profitability and puts pressure on converters to rethink their operating models.
So, what’s the way forward?
| 2021 | 2022r | 2023e | 2024f | 2025f | 2026f | 2027f | 2028f | |
|---|---|---|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022r | 2023e | |
|---|---|---|---|---|---|---|---|---|
Automation as a Strategic Lever
If the market won’t let you raise prices, and raw material costs are out of your control, the only lever left is efficiency. And that’s where automation comes in.
From quoting and winning an order to shipping cartons from the warehouse loading bay, every step in the workflow offers opportunities to reduce waste and save resources. But identifying those opportunities requires a structured approach.
Enter Value Stream Mapping
Why not carve out half a day with your leadership team and run a Value Stream Mapping (VSM) workshop? It’s a simple yet powerful tool to visualize your processes, identify bottlenecks, and uncover areas ripe for automation.
During such a session, be mindful of two common pitfalls:
- Assumed Constraints: These are limitations we believe exist but never challenge. They often stem from legacy thinking or outdated processes.
- Compensating Behavior: This is when teams create workarounds for inefficiencies instead of solving the root cause. It’s a symptom of deeper systemic issues.
Both concepts are borrowed from strategic and leadership thinking models—and they deserve their own blog post. But for now, the key is to approach your VSM workshop with an open mind and a willingness to challenge the status quo.
A Call to Action
The folding carton industry is at a crossroads. The economic climate is uncertain, and the cost dynamics are unfavorable. But within this rough sea lies an opportunity to differentiate, innovate, and lead.
By embracing automation and rethinking your production workflows, you can improve your operating margin and build resilience. It’s not just about surviving the squeeze; it’s about thriving despite it.
So, next time you’re on your terrace with a Long Drink in hand, ask yourself: What can we do differently tomorrow to create a better outcome?
