Category Archives: Corrugated Box

US Box Shipments Outpaced GDP – Why This Is Big News

2016 was a big milestone in the production and manufacturing of container-board and corrugated boxes.  According to Vertical Research Partners, corrugated box shipments in the US expanded by 2.1% on an annual basis, to 376 billion square feet, surpassing the country’s GDP growth of 1.6%.

This is big news when you look at the trend over the past years.  From 1984 until 2016 box shipments grew by just 1.1% per year, when the US GDP for the same period averaged 2.6%.  Ok great, so everyone would lump this together in the paper space and say, with paper usage falling behind over the past years, and plastic film has taken over in packaging, it would make sense box capacity has slipped.

But just hold on their folks, that is why this milestone is big news.  And now the Ahh Haaa Moment – wait for it, wait for it —– Amazon!!.   When was the last time on your front stoop was a plastic box of your Amazon goods – let me answer – never.  That’s write – corrugated box.  And I know you are saying, there is just no way, that with the takeoff of Amazon it signal handily increased this number past the GDP.

Well it is not 100% Amazon, but they are the main factor.  The other driver is eCommerce is common place today, everything is shipped in a box.  So is this just a blip or are we in a trend?  Data so far this year points to a trend.  US box shipments are up 2.8% year-on-year from January until July.

The other key point to watch here if you are an Investor, maker or supplier is pricing of the material.   In the past quarter-century, the global corrugated box industry has doubled and right along with this has been the need for OCC – old corrugated containers.

So just follow me for a second here.  80% of global containerboard capacity is predicated on the use of recycled fiber.  Meaning rarely is virgin soft wood used to make corrugated boxes.  Here is the interesting part.  With the recycling of corrugated boxes, the fibers break down so they are not as strong, so it is not like we have this endless supply.  After a couple of cycles, the material is no longer able to be used.

What we are seeing now is we are starting to use all of the recycled corrugated box material in the market, and we are starting to see virgin Kraft being used to fill the void.  The concern here is the regions with this attractive softwood trees for containerboard production are limited.  As a result, global corrugated box prices could rise a bit faster than inflation.

We at Cheever have seen these requests from new and existing customers asking for different coatings, colors and textures.  Definitely an exciting time to actual be in a growth mode when we are talking in the paper space –  this time around we are ok being “boxed” in..