Few things are as ubiquitous as the humble cardboard box. Reliable, durable, easily transportable, corrugated boxes have been around for over a century. However, with longevity comes challenges: its very familiarity means real innovation will require thinking that’s – quite literally – outside the box.
Corrugated boxes already protect a vast range of product categories, while the ability to print designs enables effective product marketing for retail display. The environmentally friendly image of corrugated boxes as a renewable resource, with high rates of recycling and reusability, have also contributed to their widespread use in shipping and transportation of goods.
The manufacture and production of corrugated materials is a $28 billion industry in the US. Over the past two decades, the industry has seen a significant amount of consolidation as companies have acted strategically to protect proprietary trade secrets and obtain new technologies by acquiring smaller rivals.
Industry consolidation is rampant. Twenty years ago, the top four players accounted for 37 per cent of the domestic corrugated supply market. By 2013, they had a joint market share of 75 per cent. But this ‘big fish eat little fish’ type of behaviour has had severe knock-on effects for technology innovations within the corrugated space.
In a commodity-based industry with slim profit margins that’s highly susceptible to macroeconomic swings, corrugated suppliers continually seek high levels of vertical integration to stay ahead of the competition. Major corrugated producers like International Paper, the largest company of its kind in the world, are deeply integrated. They own the existing supply chain, including the land and timber required for raw materials, the paper mills and the converting plants required for producing the final corrugated carton.
While integration benefits the big suppliers by providing greater control over the value chain and increasing their competitive advantage over smaller, less integrated suppliers, it has a deleterious effect on the pace and quality of 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. But the lack of competition leads to monopolies, which stifle innovation and technological advances.
A recent search of the patent landscape for corrugated showed most new patent applications have focused on new methods and processes to increase manufacturing efficiencies and lower production costs. This is at the expense of designing new and improved functionality for corrugated materials. The lack of focus on the needs and technical requirements of corrugated’s end users, and the stranglehold that producers have over the supply chain, is a clear indicator of the need for disruption within the industry.
Corrugated is strong, inexpensive, renewably sourced and recyclable, just a few of the properties that underpin its dominance of today’s packaging market. But it’s not a perfect material.
Corrugated boxes are easy to stackin warehouses, distribution centres and trucks. But stack height and stability have cost and safety implications. The height and stability of a stack relies 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 the 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 move between environments many times before arriving at their destination. The inevitable exposure to changing humidity levels results in a loss of strength, collapsing stacks and damaged or lost goods, which results in higher costs for the end users. To avoid this, you need an alternative material that is lightweight and impervious to environmental fluctuations.
The environmentally-friendly image of corrugated paperboard has contributed significantly to its widespread use in the transport of goods globally, and recycling methods and processes have improved.
In 2012, 91 per cent of used corrugated packaging in the US became new paper products, though only half of it went into the production of new corrugated containerboard. This is because the recycling of old corrugated containerboard (OCC) to pulp is hard on the cellulose fibres as they break, shorten and any new containerboard made with it is weaker.
Materials made from 100% recycled sources yield a low-grade product used in less demanding applications, such as interior packaging, newsprint and other paper products. Additionally, the recycling process is extremely labour and energy intensive, and the final product may not fully meet the technical requirements of the end users. To counter this, the manufacturing process typically uses at least 40 per cent of fibres direct from trees to provide the necessary strength.
Given the state of corrugated manufacturing and the control that suppliers have over the industry, the fastest way to innovate would seem to be to work directly with producers to target new and improved product functionality. The existing supply chain should work to develop product innovations rapidly, leveraging the scale and manufacturing expertise of large producers to bring improved corrugated packaging materials to market and make a 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 favour of the consumer, and supply-chain inertia is great. It’s possible to create innovative products but putting them into an existing capital-intensive supply chain isn’t cheap and the amount of capital investment required is one of the challenges preventing innovation.
The limited options consumers have when it comes to sourcing inexpensive secondary packaging means that suppliers have no immediate motivation to invest in anything but their own cost-reduction initiatives, which further hinders innovation.
Despite this, we are seeing small entrepreneurial efforts like GreenBox and the Rapid Packaging Container, where innovative designs seek to enhance the functionality of existing boxes made from corrugated materials, thus increasing the value proposition to consumers.
Boxes do four things for us: they are containers, they protect contents from various threats, they make handling goods easy and they communicate information. Real out-of-the-box thinking starts with recognising that we still need to provide these fundamental functions, but not necessarily in the rectangular, prismoid boxes 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 that 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, as they are impervious to changing environmental conditions. The ability to reuse an RPC multiple times dramatically changes its value proposition, reducing its carbon footprint without requiring the construction of an entirely new box each time you need one.
New material start-ups like Aeroclay, UFP Technologies, Ecovative and Biome3D are all actively seeking to disrupt traditional packaging methods with the development of innovative materials, which are sustainably sourced and have 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, has excellent thermal resistance and is completely biodegradable, making it an interesting candidate in the hunt for alternative packaging materials. The rise of automated 3D printing, in conjunction with moulded fibre packaging and these new, sustainable materials, points towards a promising future for the packaging industry.
Corrugated paperboard materials made their debut in the late 19th century while they took off as transport packaging materials at the start of the 20th, but most innovations since have been incremental. The corrugated medium is a mature technology sitting at the very top of its technology S-curve – meaning the focus is on production costs rather than improved overall box value.
The leap to a new technology S-curve is essential if companies are to continue to compete in today’s rapidly changing economy and provide value to 21st century consumers.