May 17, 2022
In January, I had the opportunity to spend some time with leading owners and executives of independent box plants and fellow suppliers throughout North America. One recurring theme in those conversations was that most everyone was coming off one of their most profitable years, despite all the challenges of the COVID-19 pandemic. If you were not profitable in 2021, you may need to reevaluate your strategy.
There are not many reasons to expect this momentum to change drastically soon, with OEM backlogs running out to early or mid-2024. Although uncertainty surrounding the Russia-Ukraine war looms, Smithers is reporting that the corrugated market is expected to grow 3.7% annually and is set to exceed $300 billion in 2023. This is coming off 2021, when we experienced growth of 4.5% in the United States alone, with Canada realizing 5.5% growth. Mexico is also embracing a tremendous growth rate of 8.8%. The growth was not restricted to North America; the global corrugated industry grew 8.8% as well, creating a fortuitous outlook for our industry.
Aiding in this growth, e-commerce sales continue with a great momentum of 45% year over year, while climbing toward an expected of $5.5 trillion in sales come 2023. Add that the average box is touched 20 times or more throughout its distribution process, and you have a stressed logistics supply chain with an even more imperative need for corrugated boxes to withstand the rigors of this supply and demand.
Furthermore, the expansion of current plants and greenfield sites should get your attention. We are seeing consistent announcements of major U.S.-based integrateds breaking ground in the northwest United States and multiple foreign-based integrateds penetrating the marketplace with brand-new facilities in the tri-state area of Ohio, Kentucky, and Indiana.
Of course, not only is the construction of greenfield facilities drawing attention, but, as we have read in this magazine and other publications, forward-thinking independents are looking at major expansion of existing locations. Additionally, it was reported at the AICC Packaging Xperience in Kansas City, Missouri, in March that at least five independents had invested in new corrugators over the last 18 to 24 months, which is equally exciting.
One area that lost some momentum during the pandemic was digital printing on corrugated. Prior to the pandemic, there was an incredible buzz when it came to digital printing. Then, it felt as if almost every time you picked up an industry publication, there was someone promoting, buying, or selling a single-pass digital printer. That, or an operation was entering the market with a multipass unit.
There have certainly been units placed over the course of the last two years, but due to the massive market changes influenced by the pandemic, the unprecedented volume demands became the primary focus of all converters. This surge pushed many digital considerations to the back burner. That noted, we are witnessing the market shift its focus back to digital opportunities with strong consideration and orders of single-pass digital printing. Additionally, much success of digital laser die cutting and creasing is being recognized throughout North America.
This is absolutely an exciting time to be in the corrugated industry! I look forward to seeing all of you at the regional AICC events throughout this summer and Corrugated Week in San Antonio this September 19–21.
Greg Jones is executive vice president at SUN Automation Group and is vice Chair of AICC’s Associate board.
