High oil prices are driving up costs of not only gasoline and everything shipped by truck, but also the plastic bins and cardboard boxes that hold much of what you buy.
Consumers may not notice the rising costs of store displays and packaging materials because they don't directly pay for them, but companies say they have risen dramatically.
TRB Plastics, a Lancaster manufacturer of such products as plastic bins for candy and pastries, and display racks for brochures, clothing and shoes, is one of the companies struggling with the problem.
TRB, a division of Merchandising Solutions Inc., has had to raise its prices, but its profits are still down.
Coping with the smaller profits can be painful, but raising prices too quickly can cause demand to slow.
"We have to absorb some of the increase," TRB President Tom Burns said.
Order sizes had dropped as the cost of raw materials and shipping increased, he said, but they have picked up again as companies made a "mental adjustment" to higher costs.
TRB isn't alone.
Intertape Polymer Group, a Montreal-based manufacturer of paper and plastic packaging, announced 6 percent and 5 percent increases in masking and duct tape prices in July. It cited rising costs for plastic, paper and petroleum-based resin.
Intertape's products include industrial electrical tape and plastic bags filled with air used in protecting boxed products, among other packaging materials.
Oil prices, which hit a record high of $147.27 on the New York Mercantile Exchange July 11 — about 93 percent higher than the price in mid-July 2007 of $76.40 — are the main culprit.
"It's getting a little rougher out here," said Dave Husser, a Manheim resident and industrial consultant for Georgia-based Unisource.
Unisource makes a variety of packaging products, from pallets and corrugated boxes to label printers and shrink wrap.
The company sells tape, corner board and stretch film to Intelligencer Printing Co., 330 Eden Road, as well as paper and packaging materials to Acorn Press, 500 E. Oregon Road.
Husser said packaging prices are likely to rise further because of increasing energy and transportation costs and a growing demand in China for boxes.
How much prices will rise will likely vary from mill to mill, he said. Prices usually shift most in September and January, as demand rises in the lead-up to the holiday season and then subsides.
Linerboard manufacturers announced a $55 price increase, to $605 per ton, earlier this month. Linerboard is used to make corrugated cardboard, and the increase would translate to an increase of about 11 percent to 14 percent in the price of finished boxes, beginning this month.
The Fibre Box Association, the corrugated cardboard trade association, said that box shipments dipped 3.5 percent in June, slightly more than the average decline for the year.
Husser said Unisource hadn't seen a slowdown, but he expected one in the fall.
"They're really busy right now because everyone's trying to avoid price increases," he said. "After a while, you just don't buy any more."
Part of that may be due to companies' attempts to economize.
"The Wal-Marts of the world have kind of made it an edict to try to reduce their packaging costs," Husser said.
Companies are watching their "carbon trails," he said. Some nut producers are using plastic bags instead of jars or bottles. More bags than bottles can fit into a delivery truck, reducing fuel costs.
Some companies are also using lighter packaging materials, substituting cardboard for wood so trucks can carry more product, he said.
For companies that produce plastics, however, reducing petroleum consumption isn't an option because it's the main ingredient of the product itself.
"We always try to get the best yield out of the materials," Burns said. "We haven't been able to cut back on raw materials."
Some petroleum-based packaging, such as plastic seals on bottles, is being replaced by natural starches.
In addition to being cheaper than petroleum, natural starches biodegrade, making them more environmentally friendly. The problem is that they aren't as durable as petroleum products.
"Most of the ones that are naturally based material are still in the developing phase," Burns said.
He added that because most natural plastics are being developed in pellet form, they won't help his business much. TRB uses sheets of plastic.
The company uses some recycled material, but not for display products.
"If it's a utility material, that's one thing," Burns said.
Recycled plastic doesn't have the same clarity as new material, he said, so TRB uses it only for opaque products.
Husser said consumers should brace themselves for sticker shock, in spite of companies' efforts to cut costs.
"Everything that we buy today is going up in price," he said.
Megan Hart is a Sunday News staff writer. Contact her at mhart@lnpnews.com.
