FreightWaves has written extensively in recent months about how historically weak U.S. box demand has been, and nothing’s changed of late. In fact, demand continues to surprise to the downside, even though it’s been consistently worse than the largest North American containerboard and box producers expected in each of the past three quarters. Why does this matter? Box demand is a reliable leading economic indicator, specifically for the goods economy; both the goods economy (as reflected in truck and rail volumes) and box demand have been profoundly weak for over a year, with no indication of improvement ahead.

After market close on Monday, the third-largest North American containerboard and box producer, Packaging Corp. of America, reported its Q2 results; these included a 9.8% box shipment decline, one of its most severe on record. Just three months ago, the company expressed optimism that demand was improving, saying on its Q1 call that “there’s been a big turnaround starting in April … still down 6% compared to April 2022 [through the first 13 days of the month], but April 2022 was our all-time record.” So much for the big improvement: The company’s rate of shipment declines got much worse thereafter.

Packaging Corp. said it expects per-day box shipments to improve sequentially in Q3, with no reason given as to why. With regional banks cutting back on lending out of necessity, the emergency government food stamp (SNAP) benefits a thing of the past, federal student loan payments set to resume in October and the Federal Reserve continuing to tighten monetary policy to combat inflation, we’re unsure what would lead to improved box demand. Even if it’s better sequentially (and we don’t know why it would be), the improvement would be off of an unusually low bar: We estimate U.S. box demand is tracking roughly in line with 2017 levels, implying no growth in six years.