Integrateds Struggle To Pass Through Rising Costs As Demand Stays Soft According to multiple media outlets, packaging producers are facing renewed pressure as ongoing conflict in the Middle East adds another layer of strain to an already pro- longed downturn. The industry has been contending with weaker condi- tions since the post-pandemic e-commerce surge tapered off. Consumer demand softened under inflationary pres- sure, followed by the impact of tariffs. Now, additional cost pressure is emerging as disruptions in the Strait of Hormuz push energy prices higher. For box makers, the timing is particularly challenging. “The consumer is being overall more hesitant,” Andy Sil-
vernail, CEO of International Paper, said on a recent earn- ings call. “We expect that to continue for a little bit of time as the uncertainty is out there economically, kind of broad- based uncertainty that was first driven by trade and tariffs, and now the conflict in the Middle East.” A pullback in demand, tied both to consumer behavior and a gradual shift toward alternative packaging materials,
has led to plant closures across the industry. Shipments of corrugated used in boxes and retail displays fell to a 10-year low in 2025, according to the Fibre Box Association (FBA), and Q1 shipments this year were also at their lowest seasonal levels since 2015. One of the most immediate impacts from the conflict has been on transportation costs. While U.S. natural gas prices have re- mained relatively stable due to strong do- mestic supply, retail diesel prices climbed to seasonal record levels in mid-April. Higher gas prices cut into consumer spending, and uncertainty caused by geo- political matters can exacerbate that. A hit like this typically translates into the use of fewer corrugated boxes, and therefore low- er packaging demand, experts say. Inflation and lagging consumer sen- timent are also reflected in home sales numbers, which significantly influences packaging sales; fiber company executives, including at Greif, have referenced the housing tie. The seasonal housing market typically ramps up to its annual peak at this point in the year, but the Iran war is among the myriad factors tamping down sales. “If you don’t get consumers back to the market and buying homes now in April and May, you basically have squandered a year,” because housing sales losses in the first half of the year are “really tough to make up in the back half,” said Michael Roxland, senior paper and packaging analyst at Tru- ist Securities. If consumers are concerned about geopolitics “and they’re not spending as much, that means less packaging.” Roxland continued, “It’s a very dynamic situation. The longer this drags on, the more risk there is to not only the economy, but the consumer.”
6 May 18, 2026
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