The Old Normal?

January 23, 2024

In my previous Final Score column, I wrote about the takeaways from the AICC Annual Meeting in Louisville in September. The knowledge we gained has to be put to use to be meaningful.

Since our time together in Kentucky, I have attended annual meetings of AICC Canada; the Association of Caribbean, Central, and South American Corrugators (ACCCSA); the Fédération européenne des fabricants du carton ondulé (FEFCO); and the RISI Fastmarkets International Containerboard Conference in Toronto; Monterrey, Mexico; Lyon, France; and Chicago, respectively. I spent time with many AICC members at each stop and met with local boxmakers, suppliers, and association leaders.

While the paper-based packaging industry’s heart beats at different rates around the world, from papermaking to converting, the outlook for our great industry is extremely consistent worldwide. That is the consensus of the myriad presentations by economists, analysts, consultants, boxmakers, and suppliers.

Lasse Sinikallas, director of macroeconomics for Fastmarkets, summarized the situation by describing the current state of the industry as “painful but manageable.” This seemed to be the resonating point throughout my travels. The pain being applied is either by current business conditions or by the uncertainty surrounding the economy, politics, and war, depending on geography. Another important message, at least for North America, is the strengthening opinion that a recession will be avoided.

From a business condition point of view, 2023 is down comparatively to the same period through Q3 2022, which was already down from the sky-high activity levels of 2020 and 2021. At the close of Q4, the projection was for box shipments to be down 4% year over year.

What about beyond the end of 2023? At each stop in my journeys, the outlook was that box shipment levels were expected to return to the “historic” trend line pre-pandemic. That will be a trend of steady, albeit slow, growth. Closer to home, the exception to the expected return to less than 1% growth is our friends in Mexico. They are currently benefiting from the reshoring/nearshoring trend and are seeing unprecedented levels of capital investment into their country. The resulting projected growth for box shipments there is at just better than 4%.

Other industry trends that seem to be universal focus on sustainability, continued growth in e-commerce, artificial intelligence, youth, lower mill operating rates, and conflicting macroeconomic signals.

AICC will be working on these topics to ensure members are well prepared to be out in front. Entrepreneurs lead, and to lead effectively, you need information. Conditions may be returning to the old normal, but AICC will continue to provide you with new tools to be effective.

Finally, this is the annual Big Associate Issue. I want to thank AICC’s supplier members for the vital and valuable sharing of mind and resources that they provide to this Association to make the mission a success.

I am proud to come from your ranks and for AICC to be your Association.