Core Insights - The cardboard box sector is experiencing significant layoffs and plant closures, indicating potential economic weakness [1][3][4] - U.S. shipments of boxes have declined for four consecutive quarters, with a 5% year-on-year drop in the second quarter [4] - The cardboard box industry is seen as a leading indicator of broader economic demand, with current trends suggesting a slowdown [6] Industry Overview - International Paper, the largest cardboard box manufacturer in the U.S., recently shut down two mills in Georgia, resulting in over a thousand job losses [1] - The U.S. has lost approximately 9% of its containerboard production capacity in the last eight months, which is double the loss experienced during the 2009 recession [3] - The Fibre Box Association reported that cardboard packaging volumes sold to retailers reached the lowest second-quarter level since 2015 [4] Economic Indicators - Economists view the cardboard box sector as a proxy for real-world demand, as it reflects the shipping needs of various consumer goods [2] - Analysts at Barclays estimate that 10% to 15% of American containerboard capacity is linked to exports, which may be affected by trade tariffs [5] - Jadrian Wooten, an economist, suggests that the reduction in box production could indicate weaker demand in the broader economy, potentially impacting GDP and unemployment rates [6] Market Dynamics - The industry is undergoing consolidation, with significant mergers such as Smurfit Kappa's $20 billion acquisition of WestRock and International Paper's $9.9 billion purchase of DS Smith [6] - Companies are also shifting towards lighter packaging to reduce waste, which may further influence production trends [6]