CARRIER COSTS AND DEMANDS AFFECTING TRANSPORTATION SERVICE PRICES

By Staff -- Logistics Management, 6/1/2000

Plastic Foam Packing

If you buy plastic foam for packing, beware! Prices for plastic foam products are due to jump this summer. Over the last 12 months, manufacturing costs rose 13.61%, thanks to higher crude oil prices that fed into higher plastic resin prices. Industry margins have fallen by $7.83 for every $100 of product sold, and in April, margins hit a record low. Though foam producers will regain a portion of their losses as resin costs ease, price hikes for foam products seem unavoidable.

Corrugated Boxes

Corrugated box prices rose 5.2% in April. This increase, combined with a 1.4% price hike in March, will add roughly $1.25 to industry margins for every $100 of product sold. Economic analysis of industry cost/price trends shows that in order to restore industry margins to their year-ago levels, manufacturers would have to reduce box prices by 4.4% (with costs held constant). So box buyers have some negotiating leverage.