WestRock taps into ‘Box on Demand’ growth with Plymouth Packaging acquisition

Plymouth currently supplies more than 100 customers with proprietary ‘Box on Demand’ machines, manufactured by Panotec and, as part of the transaction, WestRock will acquire Plymouth’s equity interest in Panotec and Plymouth’s exclusive right to distribute Panotec’s equipment in the US and Canada.

Contents with less waste

Box on Demand is a new approach to sourcing corrugated packaging for companies that ship a complex and shifting mix of products.

Nick Mockett, head of Packaging M&A, Moorgate Capital, London, told this site, the partnership is "a clever acquisition for WestRock.​

“As well as cementing WestRock’s position in the US corrugated market, it gives them key access to the Panotec Box-On-Demand technology​,” he said.

“This is likely to be a high growth area as internet shopping continues its onward march despite bad press and consumer backlash over packaging​.

“By leveraging this relationship, WestRock will help its customers produce more efficient containers that fit the contents with less waste. This is increasingly important as post-consumer waste is often not collected in the same way it would be from a traditional retail model and is often not in a fit state to be recycled when it is collected​.

“This can be a vicious circle with recycled packaging producers unable to secure raw materials​.”  

According to The Freedonia Group research company, e-commerce packaging demand is forecast to grow from $2.5bn in 2015 to $3.7bn by 2020 and $5.4bn by 2025. 

It claims corrugated boxes will become the largest component of e-commerce packaging demand, rising from $680m in 2015 to $980m in 2020 and nearly $1.7bn in 2025. 

e-commerce packaging

Boxes will account for 30% of overall e-commerce packaging demand by 2020. Among factors driving changes in consumer behavior are ordering products from mobile phones, free and fast shipping from e-retailers like Amazon, interest in healthy and fresh food choices, and growing demands for social responsibility. 

Nearly two-thirds of boxes are purchased by traditional online retailers (such as Amazon) or 3PLs (third-party logistics suppliers) that are servicing the e-commerce industry, says Freedonia. 

WestRock currently provides one-third of the nearly 60,000 tons of containerboard used by Plymouth annually, and will integrate these tons after the transaction closes.

Plymouth’s Box on Demand systems are located on the customer’s site and use fanfold corrugated to produce custom, on-demand corrugated packaging that are sized for any product type according to the customer’s specifications.

Andrew Streeter, director packaging consulting, GlobalData, said he sees the acquisition as "another step forward in online marketing, selling and distribution, a natural and progressive fit.​  

“Also being sited inside/alongside a customer’s premises follows - in some respects only- the continuing cost optimization of packaging, hdpe milk bottles are on-site manufacturing for example. But here the box making science is providing versatility as the key to optimization, rather than commonality but the cost reduce principle and objective is the same​,” he added. 

Plymouth installs Box on Demand machines on its customers’ sites under multi-year exclusive agreements for the fanfold corrugated supply. Fanfold corrugated is continuous corrugated board, folded periodically to form an accordion-like stack of corrugated material.

On-site box making

Jeff Chalovich, president, WestRock’s corrugated packaging business, said Box on Demand will enhance its automated packaging systems business and WestRock’s differentiation in e-commerce and other custom applications where on-site box making is needed.

“The acquisition will improve our margin profile, our growth prospects in our corrugated packaging business and move us closer to our goal to be 80% integrated,​” he said.

Approximately 70% of Plymouth’s sales are from its Box on Demand systems and corrugated fanfold, and 30% from traditional corrugated box packaging.

Approximately 40% of the Box on Demand systems’ sales are to e-commerce customers, with the remaining customers serving building products, furniture and other markets.

Plymouth was founded in 1991 by Paul Magnell and is currently owned by the Magnell family. Greg Magnell is president and will continue his role following the closing of the transaction.

The transaction includes Plymouth’s fanfold corrugated facilities in Battle Creek, Michigan; Ft. Worth, Texas; and Mechanicsburg, Pennsylvania; and all of the company-owned Box on Demand machines located in customers’ facilities.