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Don’t Overlook Export Business Potential

By AICC Staff

July 30, 2018

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Goods produced for shipment abroad offer large markets for corrugated packaging to protect items on their often rough journeys to their distant destinations.

According to the U.S. Census Bureau, American-made, -harvested, or -mined products destined for export totaled $1.5 trillion last year. Of course, many of those are commodities that do not offer much opportunity for corrugated packaging. Minerals, metals, livestock, grains, many crops, energy products, lumber, cement, nonmetallic minerals, and bulk chemicals are among the many products that have little or no corrugated packaging associated with them.

To get a better estimate of the amount of exported goods that do offer opportunities for corrugated packaging, we sorted through the various categories of export goods and eliminated about $1 trillion in commodities including cattle, wheat, soybeans, steel, cement, and other goods not needing corrugated packaging. That sort excluded 64 percent of last year’s exported goods.

This article provides insight into the size and growth rates of the remaining $526 billion in packageable 2017 exports, so independent corrugated boxmakers can assess the packaging opportunities in these market segments. Since non­durable goods lasting less than three years consume about 75 percent of corrugated packaging produced in the United States, we will look at this category separately from the remaining packageable durable goods exports.

Last year, packageable nondurable goods totaled $222 billion, or 42 percent of all packageable exported goods. The chart below shows the size of major nondurable export market segments.

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Fortunately for boxmakers, corrugated-intensive food and beverage products accounted for the largest share of consumable goods exports last year, at 44 percent, or $96.6 billion.

Packageable chemical products include soaps, detergents and cleaners, pharmaceuticals, toiletries, and paints. They totaled $78.8 billion last year, accounting for 35 percent of packageable nondurable goods exports.

Exports of selected plastic and rubber products, clothing, packageable paper goods, and printed materials accounted for the remaining 21 percent of last year’s nondurable goods exports, a $46 billion market opportunity for corrugated packaging.

Between mid-2014 and the end of 2016, exports shrank as the U.S. dollar strengthened by more than 25 percent. Last year, though, the U.S. dollar weakened by about 10 percent, which provided some opportunity for renewed export growth, combined with more robust growth in the economies of U.S. trading partners.

The chart below documents the 3.6 percent growth rate of packageable nondurable goods exports last year. For comparison, there was no growth last year in total U.S. production of consumer nondurable goods. Again, it is welcome news for independent boxmakers that the corrugated-intensive food and beverage sector was the fastest-growing sector last year, posting an advance of 3.9 percent.

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While the packageable chemicals market saw no change overall last year, there are categories within it that grew faster. For example, exports of soaps grew by 6.2 percent last year, and paint exports advanced by 4 percent.

Exports of packageable durable goods totaled $302 billion in 2017, accounting for 58 percent of packageable goods exports. The top chart on Page 6 shows how these exports were divided between major market segments.

The electrical appliances and equipment category includes major household appliances such as washers, dryers, and other white goods. Also included are small electrical appliances, lighting fixtures and bulbs, batteries, and industrial controls. The category amounted to $59 billion last year, or 19 percent of long-lasting packageable goods shipments abroad.

Also accounting for 19 percent of packageable durable goods exports, electronic component exports added up to $58 billion. Semiconductors and printed circuit boards are the major goods in this category.

Electronic instruments include items such as watches, clocks, industrial process controls, prerecorded CDs, and software on CDs or tapes. They totaled $49 billion, or 16 percent of last year’s packageable durable goods exports.

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Computer equipment exports added up to $46 billion last year, or 16 percent of these long-lasting packageable exports.

Communications equipment exports include cellphones, telephones, and broadcasting equipment. That category totaled $40 billion last year.

While many fabricated metal products do not require corrugated packaging, some do. Those include kitchen utensils, cookware, flatware, hand tools, ammunition, and hardware items such as springs, nuts, bolts, and washers. They also added up to a multibillion-dollar export category last year, accounting for 11.5 percent of all packageable durable goods exports.

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Except for exports of cellphones and other communications equipment, all sectors of packageable durable goods exports posted growth in 2017.

Exports of packageable durable goods increased by 3.2 percent last year, with shipments of semiconductors and other electronic components growing by 7.2 percent.

Audio and video equipment also outpaced the average, expanding by 6.5 percent. Exports of appliances and related equipment, the largest durable export sector, grew rapidly as well, posting a 4.3 percent growth rate.

What is the bottom line for independent corrugated and boxboard converters? Simply this: Exports of packageable goods offer a large and growing market opportunity whose products need corrugated packaging.


PortraitDick Storat is president of Richard Storat & Associates. He can be reached at 610-282-6033 or storatre@aol.com.