US Economy at Risk: Cardboard Packaging Decline Signals Wider Economic Slowdown

A decline in demand for cardboard packaging is a warning sign for US economic growth. Corrugated cardboard is a barometer of consumer activity and industrial health, and a slump in demand usually signals slower household spending, business pullback, and economic slowdown. Several factors are contributing to the decline, including post-pandemic adjustments, trade pressures and costs, efficiency in packaging, and cooling industries. Falling demand for packaging can ripple across multiple industries, signal risks for national growth, and impact jobs, supply chains, and corporate investment.

A decline in demand for cardboard packaging is emerging as a significant concern for the US economy. Corrugated cardboard serves as a barometer of consumer activity and industrial health, and a slump in demand often signals slower household spending, business pullback, and economic slowdown. Several factors are contributing to the decline, including post-pandemic adjustments, trade pressures and costs, efficiency in packaging, and cooling industries. Falling demand for packaging can ripple across multiple industries, signal risks for national growth, and impact jobs, supply chains, and corporate investment.

According to a recent report, cardboard-box demand has been slumping, indicating potential issues with the health of the American consumer. Goods ranging from pizzas to ovens are transported in corrugated packaging, and a historic run of pulp-mill closures is signaling problems for the companies that make corrugated packaging as well as the timberland owners who sell them wood Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

International Paper, the country’s largest box maker, announced last month the shutdown of two U.S. containerboard mills, which make the brown paper that is folded into corrugated packaging. The closures will result in a loss of about 9% of the U.S. containerboard-production capacity within a span of about eight months, roughly twice the capacity lost during the recession in 2009 Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

Box shipments have fallen from the record highs reached during the pandemic to the lowest levels since 2016. On a per-capita basis, the drop is even sharper, with box shipments per American down more than 20% from their 1999 peak Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

International Paper Chief Executive Andy Silvernail told investors earlier this month that the Memphis, Tenn., company had forecast demand to grow about 1% this year, but it now anticipates a 2% decline. This is a surprising turn in the e-commerce era, which was expected to require evermore containerboard to facilitate the home delivery of goods that had been shipped to retailers in bulk. The thesis seemed to play out during the pandemic, but demand has since wained Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

Prices for the most common variety of linerboard, the type of containerboard used for the outer layers of corrugated sheets, are about $945 a ton, up from roughly $725 at the end of 2019. Producers have continued to raise prices to counter inflation and pressure on their profit margins, despite buyers paying only $40 more when producers sought earlier this year to raise prices by $70 a ton Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

The wave of industry consolidation that began last year has put even more market share and pricing power in the hands of the three largest U.S. producers. International Paper followed in January with the $7.2 billion purchase of DS Smith, a leading European box maker. Then, last month, Packaging Corp. of America paid $1.8 billion for rival Greif’s containerboard business Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

Stock analysts say the capacity cuts should help producers push prices higher next year even if demand continues to weaken. Box makers and analysts say demand presently suffers from uncertainty in U.S. boardrooms and export markets because of President Trump’s tariffs as well as from weakening consumer spending. The sputtering housing market has also hurt, reducing the need for moving boxes as well as packaging for building products and appliances Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

E-commerce firms, including Amazon, have trimmed their cardboard consumption by shipping more items in paper and plastic mailers, using made-to-measure boxes, and reducing instances of boxes within boxes, analysts say Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

Silvernail said the Georgia mill closures, which follow its April shutdown of a big mill in Campti, La., are less about demand trends than his turnaround plan for the 127-year-old company. He wants to focus on the few customers who generate the most profit and to eliminate money-losing locations Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].

The 89-year-old mill on Savannah’s waterfront had been starved of investment and was due for about $300 million of upkeep. Instead, International Paper will spend $250 million to convert a copy-paper mill in Selma, Ala., to one that produces the lightweight containerboard popular with shippers looking to reduce fuel consumption. Other investments to boost capacity at containerboard mills in Louisiana and Arkansas have been announced by closely held Hood Container and Green Bay Packaging, respectively Cardboard-Box Demand Is Slumping. Why That’s Bad News for the Economy.^[1].