"Cardboard box decline" sounds the alarm! Q2 shipments hit a 10-year low, US consumer resilience under attack from Trump's tariffs.

Notice that analysts and investors will be looking for clues to the sentiment of the American household economy in Friday's retail sales report. Observers in the corrugated box industry indicate that they have already noticed some signs. As a non-traditional economic indicator, the sales of corrugated cardboard used for transporting a variety of goods from doughnuts to dishwashers is declining, suggesting that retail demand across industries may face adjustments in the near future. According to data from the Fibre Box Association, the volume of shipments of boxes in the United States (i.e. the volume of empty packaging materials sold to retailers) has fallen to the lowest level since the second quarter of 2015. (Corrugated cardboard is also used for other products such as 3D advertising displays, but because the majority is used for packaging, the industry commonly mixes the terms "box shipment volume" with "corrugated cardboard shipment volume".) One of the world's largest pulp and paper companies, International Paper, headquartered in Memphis, reported a 5% year-on-year decline in daily box shipments in the current quarter. Dublin-based packaging giant Smurfit Kappa Group recorded a 4.5% decline in corrugated cardboard sales in North America, the largest drop among all of its operating regions. CEO Anthony Smurfit stated during a recent earnings call, "If U.S. sales pick up, it will strengthen our confidence, but we have not seen any signs of that yet." In a country where consumer spending accounts for nearly 70% of the economy, any retail contraction will alert economic observers and government officials. After two consecutive months of decline, U.S. retail sales rebounded in June, temporarily easing concerns about consumer health. Retail data for July will be released on August 15th, with current forecasts indicating an increase, partly due to events like Prime Day and other online promotions. Columbia Business School economics professor Brett Haus pointed out that although the highly seasonal corrugated box industry is not a direct indicator of retail spending, it can serve as an early warning sign similar to beauty spending or consumer confidence indexes. Since boxes are typically not booked too far in advance, they can reflect purchasing and manufacturing activities in near real-time. "It evolves in sync with the demand for consumer goods and their manufacturers," Haus said. The decline in packaging demand by 2025 is mainly due to the mixed signals on tariffs issued by President Trump. Companies are hesitant to stockpile large volumes of packaging materials before the impact of tariffs on costs and long-term demand for finished products becomes clear. Courier companies like FedEx and UPS have not updated their full-year guidance as usual due to the uncertain situation, but UPS CEO Carol Tome told analysts in the last quarter that the small package market was "adversely impacted by near historic lows in U.S. consumer confidence." During an earnings call at the end of July, Smurfit stated hopes for a recovery in demand in August and September - "provided that the issue of tariffs can be resolved." Bloomberg Intelligence analyst Ryan Fox pointed out that there is "fundamentally no organic growth in consumer goods," and supermarkets are even offering promotions like "buy two get three free," which is never a good sign for demand. Former sell-side analyst Adam Josephson added that low housing turnover means consumers are no longer buying large items (which require box packaging) like refrigerators and loveseats. This contrasts sharply with the early days of the COVID-19 pandemic - when the demand for packaging skyrocketed, and some North American pulp mills temporarily switched to produce cardboard, causing a brief shortage of cultural paper. However, the surge in cardboard sales due to the pandemic was just a temporary relief for an industry plagued by high costs and outdated facilities. Smurfit Kappa Group recently announced the closure of an old factory in Iowa, while International Paper earlier this year announced the closure of four factories, including one in Louisiana that produced containerboard (brown paper used for box production). The factory was the seventh largest employer in the Natchitoches district, and its closure led to the shutdown of two schools by the local school board due to reduced tax revenue. Nearby Natchitoches Mayor Ronnie Williams said, "It's the laws of economics, International Paper has to reevaluate its business model," with generations of his family having worked at the factory, which had been operating for 50 years. Retail packaging consultant Ron Sasson of Hudson Windsor believes that if Trump can revive American manufacturing and drive more locally produced goods that need transportation, it could be a redemption for the industry. However, this would require offsetting the impact of reduced imports - imported goods usually require unpacking and repackaging, which consumes cardboard. He also pointed out that a decrease in U.S. exports of food to trade partners could also impact packaging demand. "Box manufacturers are urgently waiting for a rebound in demand, but the situation is not improving and is beyond their control," Josephson said. "All the indicators I track are pointing in a less optimistic direction."