Disruption Report #43 ? Customer Returns Up 6%, a Cardboard Box Shortage and Wages Increase 4%

And Now There’s a Cardboard Box Shortage

Yes, there is a shortage of one of those elements in the supply-chain that we take for granted – cardboard boxes. According to “The History of the Cardboard Box:”

The first corrugated cardboard box manufactured in the US was in 1895. By the early 1900s, wooden crates and boxes were being replaced by corrugated paper shipping cartons. Cardboard boxes were much lighter and much easier to handle.

We won’t have to go back to crates or barrels (at least I hope not), but there will be a shortage through the first quarter of the year. Here is how Jenn Skerritt put it in her Bloomberg article, “Cardboard-Box Shortage Is Latest Disruption to Global Shipping:”

While e-commerce has fueled demand for packaging, pandemic-related labor shortages and shipping constraints are also making it harder to make and deliver the boxes used to carry everything from food to consumer goods.

Ms. Serrittt quotes International Paper Chief Executive Officer Mark Sutton as saying. “Shipments will be choppy in January and most of February.” He predicts the situation will alleviate in the second quarter.

WAGES ARE UP

Freight costs are up, and so is plastic. Wait, there’s more…wages are up as well. Gabriel T. Rubin writes in his Wall Street Journal article, “U.S. Wages, Benefits Rose at Two-Decade High as Inflation Picked Up:”

The U.S. employment-cost index—a quarterly measure of wages and benefits paid by employers—showed that costs continued to rise at the highest rate in two decades. The fourth-quarter gain, compared with a year ago, was 4% on a non-seasonally adjusted basis.

Inflation was, however, up 7%, and worker salary increases are not keeping up with inflation. Expect continuing pressure to increase wages.

16.6% of Retail Sales to Be Returned

The toy industry may have been up 13% in 2021, but 16.6% of what retailers sold is going back to the store. A whopping 6% more than 2020. That’s according to Jordan Homan’s Bloomberg article, “Retail Latest Challenge Is a ‘Problematic’ Number of Returns.” As high as that percentage is, it’s not as big as online returns, which were 21%.

Interestingly, the author is unsure what is causing returns other than that more people are visiting physical stores than they did in 2020. My guess (and its a guess) is that because online shopping is based upon the ease of making a return, consumers have come to see it as part of the consumption process. Bricks and mortar retailers are feeling the effect.

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source http://www.expertclick.com/NewsRelease/Disruption-Report-43-Customer-Returns-Up-6-a-Cardboard-Box-Shortage-and-Wages-Increase-4,2022266759.aspx