Secondary Packaging

Everything that groups, protects and presents primary packs between the filling line and the retail shelf: regular slotted corrugated cases, die-cut retail-ready and shelf-ready packaging, corrugated trays and pads, shrink-bundling and collation film, multipack sleeves and wraps, and the partitions, separators and layer pads used inside cases. Price is set almost entirely by the containerboard cycle plus a converting charge. For an ambient food manufacturer this is usually the largest packaging line item by weight and by cube, and the one where board grade, case dimension and pallet cube interact directly with freight cost.

• Index-linked: the market standard for mid-size and larger buyers, 24-month tenor, quarterly or semi-annual reset on a named containerboard or linerboard index
• Fixed price: common for smaller plants buying from regional sheet plants, 12-month tenor; suppliers seek to reopen mid-term in a rising board market
• Cost-plus: occasional, 24-month tenor, board at documented mill cost with converting fixed per thousand square metres; requires open-book rights
• Spot: occasional, per order, for promotional displays, seasonal formats and overflow volume; carries a substantial premium in a tight market
• Cap and collar: rare, 24-month tenor, quarterly within a band; occasionally achievable with an integrated converter that has its own board position

• Containerboard (liner plus medium) share of case price: 45% to 65%
• Converting share of case price (corrugating, printing, die-cutting, gluing, scrap): 20% to 35%
• Freight and delivery share of case price: 5% to 15%
• Mill-announced increase to buyer-side pass-through lag: 30 to 120 days
• US PPI, corrugated and solid fiber boxes (PCU3222113222110), July 2026: 493.2, up 6.0% in three months and 5.9% in twelve months, at its five-year high
• US PPI, plastics packaging film and sheet (PCU326112326112), July 2026: 217.7, up 12.4% in three months and 22.1% in twelve months

• Split the case price into a board index leg and a fixed converting leg: "a mill increase of USD 140 per ton on board does not justify the same percentage on the case"
• Use OCC as a leading indicator: "a sharp OCC rally is the signal to accelerate a reset or lock the converting leg before the board index catches up"
• Tender the independent sheet-plant channel against the integrated mill channel: "knowing which phase of the board cycle you are in"

• Recompute the last four supplier increase letters bottom-up from grammage, board area and the published containerboard index, and invoice back the over-recovery (impact about 3%, low effort, about 6 weeks)
• Restate every corrugated quote and invoice as price per thousand square metres of board at a common board grade, and list every supplier and plant pair more than 10% apart (impact about 4%, low effort, about 4 weeks)
• Add a symmetrical decrease clause with look-back true-up to every corrugated agreement renewing in the next two quarters (impact about 2%, medium effort, about 12 weeks)

• Sequential mill increase waves compress margin faster than finished-goods pricing can respond. Leading indicators: multiple announced containerboard increases within twelve months; the OCC proxy rising more than 10% in a quarter; producers describing capacity as sold out. Mitigation: track the announcement pipeline as the forward signal, fix the converting leg early in the cycle, require mill-letter evidence for every pass-through, and pre-agree a finished-goods cost-recovery mechanism with commercial teams.
• Over-recovery: a board increase per ton applied as the same percentage to the whole case price. Leading indicators: case price percentage increase equal to or greater than the announced board percentage; no per-case board build-up provided. Mitigation: require the per-case arithmetic (grammages, board area, board cost per case) with every increase letter, cap the indexed portion at the agreed board share, and reconcile realised index moves against announced increases before paying.
• Allocation and supply shortage in a sold-out board market. Leading indicators: lengthening lead times, converters declining to quote new volume, mills taking commercial downtime, the incumbent proposing allocation. Mitigation: contract a minimum monthly capacity reservation with a defined allocation ranking, dual-source the top case codes, hold buyer-owned dies at a second converter, and raise safety stock on SKUs whose lead time exceeds current cover.

1. Which containerboard index, if any, is named in the contract, and is it the substrate index (corrugated paperboard) or the finished-box index (which already contains converter margin)?
2. For each of the last four increase letters, did the supplier provide a per-case board cost build-up showing grammages and board area, or only a percentage?
3. Is the reset symmetrical, and can you evidence a corrugated price decrease actually received in the last 24 months?
4. Are your converters integrated (mill-owning) or independent sheet plants, and when did an independent last quote your volume?
5. Who owns the cutting dies, print plates and design files for each case code, and is the transfer free?

• Transaction-level secondary-packaging purchase history for 24 to 36 months: date, plant, supplier, case code, quantity, unit price, extended value, currency, incoterm and delivery reference
• Case specification sheet for every code: dimensions, board grade, flute, ECT or bursting strength, liner and medium grammages, board area per case, print process and colour count, die reference
• All corrugated and film supply agreements including raw-material clauses, named indices, indexed share of price, reset cadence, notice periods, tooling ownership and allocation terms
• Every supplier price-change notification from the last 24 months with the stated justification, the mill announcement relied on, and the resulting invoice price change
• Pallet pattern data: cases per layer, layers per pallet, pallet footprint, stack height, and trailer or container fill for inbound empty cases and outbound finished goods
• Supplier lead-time history and any allocation or shortage notifications received in the last 24 months