Cardboard box demand to remain low in 2023

Cardboard box demand to remain low in 2023


Corrugated box shipments, which are a good barometer for goods demand, sank in 2022 as goods demand did the same. Many in the box industry expect 2023 to be worse.Get more news about Boxes Cardboard,you can vist our website!

FreightWaves conducted a survey of independent North American box-makers last week. Executives from 32 companies, with an average size of about $85 million in sales, shared their feedback.

U.S. box shipments fell by nearly 4% in 2022, with the fourth quarter the low point of the year, following a highly unusual increase of about 6% in 2020-2021 driven by unprecedented government stimulus spending. As a result of last year’s weakness, shipments fell back to 2000 levels.

The second-largest North American containerboard producer, WestRock, indicated on its earnings call in November that it expected box demand to begin to improve in the January-to-March quarter. The previous quarter was an inventory destocking period. Retailers expected to clear their overstuffed warehouses and require fewer boxes as a result.

However, that uptick in demand for boxes hasn’t happened yet. The survey respondents’ box shipments were modestly lower sequentially in the first quarter of 2023 compared to the fourth quarter of 2022. These companies don’t expect much sequential improvement in April or thereafter. Their box shipments were down a substantial 12% versus a year ago in the first quarter. While executives don’t expect the U.S. box market as a whole to be down quite that much in Q1, a steep decline nonetheless appears likely.
The respondents’ lack of optimism regarding the rest of the year comes as little surprise considering the potential impact of the banking crisis coupled with unusually low savings rates, record-high credit card debt despite record-high borrowing rates, rising credit card and auto loan delinquency ratios, and nearly two years of declines in real average weekly earnings.

Respondents indicated their Q1 shipments were roughly flat with 2019 levels and expect April through year-end to be more of the same.

If box demand is back to 2019 levels, that means it’s also back to 2018 levels. Box demand will have been flat over the past five years if this trend holds.

As U.S. consumers further deplete their savings accumulated amid the massive government stimulus, and under the assumption that banks will restrict the availability of credit to wide swaths of U.S. industry, box demand might only get worse from here over the next several months.