Fluctuating OCC Rates: What They Are And Why They’re Bad For Business

Written by Mark Young, Chief Administrative Officer

HOME / BLOG / Fluctuating OCC Rates: What They Are And Why They’re Bad For Business

A volatile market is impossible to predict. Fluctuating prices for goods and services are a norm for certain industries, and manufacturers can’t really do much about it.

Oil is a prime example. The price of oil goes up and operational costs increase for manufacturers.

The price of old corrugated containers (OCC) is another volatile figure.

OCC rates can sharply rise and plummet depending on market conditions on a global and local level. Case in point: in fall 2017 the average U.S. OCC price dropped from about $150 to around $95, according to RISI, a pulp and paper industry publication.

The major drop in OCC prices was primarily due to actions taken by China, which had drastically slowed down imports of recycling materials imported from North America. China is where a large majority of North America’s used corrugated materials are recycled and some experts say the country effectively controls the OCC market.

Unfortunately, for manufacturing businesses, fluctuating OCC rates make used corrugated materials into a completely unreliable financial return. Add in the revenue losses associated with the corrugated cardboard recycling process (transport charges, equipment rental costs) and manufacturers get hit even harder by varying OCC rates.

But manufacturers do have a proven way of stabilizing OCC prices: reusing corrugated cardboard box waste.

When businesses repurpose their used boxes through Rebox, they receive a fixed, lifetime payout rate. The fixed rate adds up to about 40% more money for used corrugate all without the stress of ever-fluctuating OCC rates.

Transport charges, equipment rentals, and light load charges are all covered, too, so manufacturers can make the most out of their OCC returns.

Oh, and remember how the price of oil also tends to be incredibly volatile and add additional expenses to manufacturers?

Well, since the reuse process is all done in North America, manufacturers don’t need to transport used materials, leading to a lowered dependence on foreign oil and transport costs.

All of that added revenue can then go into investing in a manufacturer’s most important resource, its employees.

Enjoying a reliable (and higher) return provides businesses with more financial breathing room, letting companies micro-finance loans for employees, implement profit-sharing programs, or just pay for fun team events to boost morale and job satisfaction.