ERA’s quarterly insights regarding market conditions, potential impacts on procurement, and supply chain planning.

General Supply Chain Observations & Updates

Supply Chain & Freight

There is significant evidence that supply chains have “normalized.” Delivery times are fast and overall demand is low. Many companies are now looking at “longer-term” supply chain planning and changes. Some of these changes include multi-sourcing and digitizing supply chain operations.¹ Geopolitical events and resulting tariffs/sanctions could quickly change the supply chain landscape, however, so it is more important than ever to be nimble with respect to strategic and tactical planning.

Despite rumors otherwise, freight rates have continued to decrease since October 2022. However, it is starting to look like that may change in the upcoming months. Larger truck-to-load ratios, along with a 29.4% increase in spot load posts, indicate higher demand for freight transportation.2 According to Cass Information Systems, Inc., and ACT Research Co, we are at the “Cycle Bottoming” stage of the “Classic Truckload Cycle.” 3

KEY TAKEAWAY: Keep a close eye on freight rate trends and stay informed. Ask your suppliers to clearly communicate any freight rate changes. Look to partner with freight specialists to assist in taking advantage of the truckload cycling bottom.


Although linerboard prices have fallen $90 per ton (9.6%) from November 2022 through May 2023, most end-user prices have not declined at this rate. Corrugated order volume fell for the past three quarters but then remained stable throughout the end of Q2 2023. Cautiously optimistic containerboard companies are asking if this volume stabilization will continue.4

KEY TAKEAWAY: Discuss the linerboard declines with your corrugated suppliers to get your prices more in-line with decreased prices. Seek to work with a packaging specialist to assess your corrugated items, box size optimization, and ensure prices are best-in-class.


Lumber prices increased throughout June and July. Inventory scarcity in the home-buying market is boosting the demand for lumber (despite rising interest rates), and the Canadian wildfires and slower European lumber production are adding to a reduced supply of lumber overall.5

As mentioned last quarter, pallet providers are still constrained by staffing and (recycled) material availability issues. Raw material pricing (lumber) is flattening, which will mostly likely lead to pallet prices leveling out as well.6  It will be important to keep an eye on transportation and fuel costs, however, as those trends also affect total pallet pricing.

An interesting new development is the need for “smart pallets,” or pallets fit with RFID tags or other tracking devices. Companies are hungry for data showing them how long the it products take to get from point A to point B, and how long they remain in one place. Another trend is for pallets to be used in automated warehouses. Pallets will need to be able to fit specialized equipment such as remote-controlled forklifts.7

KEY TAKEAWAYS: Similar to corrugated, lumber has seen drastic price declines from Q3’22. Now is a good time to review your pallet expenditure to determine if you are utilizing the optimal pallet for your needs and if pricing is in line with the market.

Chemicals & Gases

According to the American Chemistry Council, “more than 85% of basic and specialty chemicals are consumed by the industrial sector, and the outlook for industrial production remains weak.” 8 The overstocking that occurred throughout 2022 has decreased chemical production for the first half of 2023, and it is doubtful the production numbers will rebound until 2024. Analysts are hopeful that clean energy efforts and supply-chain-independence desires will boost US chemical production, in particular.

KEY TAKEAWAY: Raw material prices continue to decline. Now is a great time to assess market prices for chemicals/ingredients and gases. Suppliers are hungry to retain and/or gain new business. Partner with a chemical/raw material specialist to review your current list of materials, prices, and potential offsets for R&D to consider.


Domestic steel production is down slightly from last year, with US mills currently at a 77% utilization rate. Overall, steel demand is down. However, construction spending continued to increase for five consecutive months, with a “large jump in spending on residential projects,” according to the Majestic Steel Core Report at the beginning of July.9 Nickel, copper, aluminum, and zinc prices are all on a downward trend. Electric car battery makers are still clamoring for the raw materials needed for their lithium and cobalt batteries, but at the same time, they are researching alternate chemicals such as manganese, iron, and sodium.10

KEY TAKEAWAY: Communicating with your suppliers to ensure material availability is still a good idea, especially for steel, given the reduced production and relatively low mill utilization rate. Once you are confident your supply is confirmed, pushing suppliers for lower prices is appropriate, as evidenced by the continued decreases in indices for most metals.


Price drops are still expected for Polyethylene (PE). Inventories are high, and plant operation rates are staying low. David Barry of PetroChem Wire notes that in particular, “demand for stretch film [is] estimated to be off by about 10% year-over-year.” Polypropylene (PP) is also showing lower demand and record inventory levels. Even a few force majeure events were not enough to increase the prices.11

KEY TAKEAWAY: In addition to reviewing prices to ensure your prices are in-line with market changes, now is a good time to assess your stretch film/polybag programs to optimize the materials you are using (size, thickness, color, wrapping/bagging technique).


1) S&P Global Market Intelligence; 2); 3);
4); 5); 6);
7) Inbound Logistics, May 2023; 8) American Chemistry Council’s 2023 Mid-Year Situation & Outlook; 9) Majestic Steel Core Report 07.07.2023;
10) S&P Global Market Intelligence; 11)Plastics Technology

About the Authors

Travis Cantrell and Patrick Garr are Manufacturing Specialists with Expense Reduction Analysts. They both hold engineering degrees and have over 24 years of collective experience studying complicated client expenditures in Direct Material, Industrial Chemicals/Gases, Packaging Suppliers, and Factory Consumables/MRO. ERA utilizes its in-depth subject-matter expertise to negotiate with suppliers and deliver best-in-class sourcing solutions for their clients.