Reviewing Your Corrugated Contract Could Keep Pricing in Line

Companies that rely on corrugated packaging for their shipping needs could see a bump in pricing this fall. Large market corrugated producers have collectively increased the price of containerboard by $50 per ton. The new pricing, which amounts to roughly an 8 percent increase, is set to take place on October 1, 2016. This will be the first meaningful corrugated increase since 2012.

A Contract Review Can Safeguard Price Increases

If a company has become complacent in monitoring corrugated usage and spending, now is the perfect time to review the contract to determine how market increases are outlined. Executives should determine if their current price per square foot is within a reasonable range. Also, if a supplier has passed along price increases since 2012, it isn’t tied to corrugated packaging’s market price.

If a corrugated contract isn’t in place, perhaps because previous stakeholders didn’t want to feel locked into a specific supplier, an executive should have the current supplier submit a proposal. Doing so will safeguard a company’s available inventory levels and determine by how much prices can increase. If a company does not have an agreement in place with the supplier, it’s at the mercy of the supplier to ensure that increases are commensurate with what the marketplace is doing.

Now is the Time to Buy

Prior to Oct. 1, companies should purchase as much corrugated packaging as their inventory policies allow. If a supplier is holding a company’s inventory that was purchased before October, this could keep the increase at bay until more supply needs to be ordered. 

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