FBA Provides Mid-Year Update On The Health Of The Corrugated Industry BY DENNIS COLLEY
I’m often asked about the overall health of the U.S. corrugated industry and issues facing Fibre Box Association (FBA) member companies. My re-
sponse is usually based on box shipments, environ- mental pressures, supply chain and labor shortages. Both 2020 and 2021 were record-setting years for box shipments, bolstered by 20-plus percent growth in e-commerce. Consumers took advantage of the dollars pumped into the economy by the fed- eral government and shifted from buying goods at brick-and-mortar retail stores to on-line shopping.
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Dennis Colley
This accelerated rate of on-line shopping established a new baseline that will be felt for years to come. Although U.S. Census data shows 2022 e-commerce sales are declining, boxes used in e-commerce still represent 16-20 percent of total box shipments. This year, inflation has put enormous pressure on the cost of fuel, food, and goods. The latest numbers reported by the U.S. Bureau of Labor Sta- tistics show the June 2022 Consumer Price Index (CPI) rose 9.1 percent versus June 2021. Families are struggling to meet basic needs. The U.S. Bureau of Economic Analysis (BEA) reported that consumers spending in 1Q22 increased, but most of these dollars were used to cover the in- creased cost of fewer goods being consumed. The Federal Reserve Board has increased interest rates to help curb inflation. Manufacturing is suf- fering from decreased demand, increased costs, supply chain issues and worker shortages. Lower home sales, manufacturing output and food con- sumption are all drivers of box demand leading to decreased box ship- ments, as reflected in 1Q22 statistics. Extended Producer Responsibility (EPR) is the environmental topic of the day. California has become the fourth state to approve EPR legisla- tion. These laws place a fee on manufacturers to cover the disposal costs of packaging at end of life, rather than leaving local communities solely responsible for bearing those costs. Other states with EPR laws include Maine, Oregon and Colorado. It is anticipated that one to two addition- al states will approve EPR legislation later this year and potentially 10-15 more in 2023. Plastics continue to be under scrutiny as many countries and brand owners have banned the use of single-use plastic containers by 2025 and 2030. This ban provides a huge opportunity for paper-based packaging to offer alternative sustainable solutions. More recently, the top- ic of microplastics in the air and water has resurfaced as a health concern. In addition, Europe is leading a movement toward zero carbon emissions by 2050 with mandates by governments to achieve 50 percent reduction by 2030 and 100 percent reduction by 2050. FBA member companies are very concerned about the shortage of raw materials and long lead-times for manufacturing equipment. Supply chain issues continue to plague industry suppliers and have hampered the delivery of starch, adhesives, pallets, and other essentials for making corrugated boxes. Lead times for new equipment have stretched out one to two years for delivery, as manufacturers look to automate and optimize production lines. The shortage of plant workers has made automation a strategic initiative for many companies. According to Kearney’s 2021 Reshoring Index, there is a national push to bring back key manufacturing segments from Asia to the U.S., including semi-conductor chips, batteries, CONTINUED ON PAGE 14
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August 1, 2022
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