Dive Brief:
- Fastmarkets RISI announced its plan to add a corrugated box cost index for North America as of Oct. 19.
- The proposed Corrugated Cost Benchmark is intended to “provide greater transparency into changes” for the main costs to manufacture and deliver corrugated boxes in North America. It would offer a “robust and consistent measure of those changes,” the company said in a news release.
- Fastmarkets RISI is accepting emailed comments on the proposed CCB until Oct. 5.
Dive Insight:
The proposed CCB would combine Fastmarkets RISI’s virgin and recycled fiber price data with third-party economic and cost indicators related to labor, energy, chemicals, maintenance, transportation and other factors. Each component would be weighted in the calculation, with manufacturing wages most heavily considered at 26%, followed by repair and maintenance and “other manufacturing costs” tying for second place at 14%, and OCC coming in third at 10%.
Each input for the calculated benchmark would be indexed to a January 2019 baseline of 100 points, and changes would be measured against that. The CCB would not represent the absolute cost or market price of a corrugated box, but rather it would measure changes in a modeled industry-average cost basket, according to Fastmarkets RISI.
The company did not provide a statement or additional information about the CCB to Packaging Dive as of publication time.
Fastmarkets RISI’s introduction of the CCB “is a major development” and stands to impact the decades-old model for monthly corrugated pricing, said Adam Josephson, packaging industry analyst and founder of Sakonnet Research.
But as it stands, the announcement may raise more questions than answers.
“All we can do right now is speculate because RISI put out this short announcement, and that's it,” Josephson said. “We're just left to guess as to why they did this, why now, and what this means for their existing containerboard price index.”
It’s also unclear exactly how box buyers would use such a new index, he said. Plus, it’s unknown what implications — if any — the new index could have on how the company’s existing containerboard pricing index recognizes producers’ recently disclosed hefty recent price hikes in their third round of announced increases this year, Josephson said.
Fastmarkets RISI’s Sept. 18 data release in its Pulp & Paper Week publication is especially anticipated, as it is the first month that these increases would be in effect and have the potential to be recognized. There has been outcry from industry participants about those hikes, including from AICC, The Independent Packaging Association. Packaging Corporation of America especially has drawn ire due to its unprecedented $140 per ton increase, roughly double that of traditional hikes.
“Are containerboard and box prices supposed to be tied to supply-demand fundamentals or to costs?” Josephson mused, suggesting the answer is likely some combination of both. “Over the past three years, we've seen a flurry of price increase announcements having nothing to do with supply-demand fundamentals ... and presumably everything to do with passing on cost inflation.”
Despite the uncertainty about the proposed CCB, some industry observers point out that it appears to mimic a box index that Bloomberg Intelligence launched in 2025.
“On the one hand, I think we kind of expected” Fastmarkets RISI to release a box price index, “and on the other hand, we didn't,” said Ryan Fox, corrugated packaging market analyst at Bloomberg Intelligence, who led development of the Bloomberg Corrugated Box Cost Index.
Bloomberg intended for its index to generate market transparency that it felt had been lacking, Fox said. He touted the company’s openness with disclosing its index methodology and subsequent updates.
“After the first year, it became apparent to us that we needed to incorporate rail freight. So we did make a change,” he said. “We rejuggled the distribution and shipping side of our weighting and methodology.”
Transparency is one area where Fastmarkets RISI has endured criticism regarding its existing containerboard index. Critics say the company surveys few contacts for the data and isn’t forthcoming about who those are. Plus, there are questions about the inputs and their weighting to calculate containerboard pricing data.
Fastmarkets RISI’s containerboard index is the leading one in the industry, but it has faced criticism for being used to reflect conditions across the broader containerboard market when it only represents the open market. In recent years, analysts had noted the open market decreased to represent less than 10% of the entire industry; Fox and Josephson both estimate that share has further shrunk to roughly 5%.
Over the last couple years, multiple companies’ executives have expressed frustration with Fastmarkets RISI’s containerboard index. Some have said they want to move away from using it as a pricing trigger written into customer contracts.
Bloomberg has seen some movement toward its index, Fox said. “People are still kind of kicking the tires” to determine how best to use it, considering the short time it has been offered.
“I think box buyers are very savvy, but they also didn’t know they had options. Now it’s becoming apparent to them that they have options and they are exercising those options,” Fox said. “I think the industry has been long overdue for some change.”
