What is the 'Cardboard Box Index'?

The cardboard box index is used by investors to gauge industrial production The output of cardboard boxes is an indicator of future purchases of non-durable consumer goods.

BREAKING DOWN 'Cardboard Box Index'

The cardboard box index is considered a reliable measure of manufacturing by investors because it reflects the business cycle. It is estimated that close to 75 to 80% of all non-durable goods are shipped in corrugated containers. Therefore, the greater the amount of cardboard boxes produced, the greater the amount of cash invested by companies to produce goods.

Growth in gross domestic product (GDP) is the most common indicator used to measure economic growth, but it is published on a quarterly basis only and can be a lagging indicator that takes months to calculate and is often revised. Because GDP estimates can be unreliable, other measures are often used by investors such as cardboard-box production, freight tonnage, metal production, urban area mass transit usage, entertainment expenditure and household waste production. Because companies need cardboard to package and ship goods, the production of cardboard boxes is a leading indicator of manufacturing activity.

The Corrugated Market and Box Prices

Dan Binkoski, head of sourcing for the packaging manufacturer Lumi, predicted in 2017 that the pricing of corrugated packaging products was set to increase industry-wide. These price increases are a result of growing demand, changes in the supply chain and economic inflation. 

Binkoski states that most corrugated boxes are made out of recycled material, and almost 50% of the average corrugate box is composed of recycled material. Old boxes called old corrugated containers (OCC) are broken down and converted to linerboard, which is the paper used to produce corrugated board and boxes. The price of linerboard was predicted to increase from $665 in October 2016 to $715 in April 2017.

OCC costs will rise when there is a higher demand for boxes. Binkoski predicts that, because of e-commerce and consumer online shopping, box use will increase by 10% per year through 2020. At the same time, OCC is being exported to China with an increase in the Chinese paper and linerboard industry of 10% year over year. 

Juriong, a Chinese food packaging firm predicted in June 2018 that a cardboard box shortage is imminent before the country's annual Singles' Day shopping spree in November. The largest cardboard maker in China, Nine Dragons Paper Holdings, raised prices in mid-September four times within two months.

According to Juriong citing According to industry officials, cardboard prices reached 5,000 yuan (U.S.$759) per ton in September, up from around 3,000 yuan in July 2017. E-commerce services from Alibaba Group Holding have increased markedly, and over 30 billion parcels were delivered to homes in 2016, six times the amount delivered in the year 2000.

  1. Safe Deposit Box

    A safe deposit box is usually located inside a bank and is used ...
  2. Big Box Retailer

    A retail store that occupies an enormous amount of physical space ...
  3. International Equity Style Box

    The international equity style box is a visual representation ...
  4. Style Box

    Style boxes were created by Morningstar and designed to visually ...
  5. Black Box Insurance

    Black box insurance is a program that offers premiums based on ...
  6. Equity Style Box

    An equity style box is a visual representation of the principle ...
Related Articles
  1. Investing

    Understanding the mutual fund style box

    A style box is a graphical representation of a mutual fund's characteristics. Evaluate your investments, or your investment professional, with this simple tool.
  2. Tech

    Google's Cardboard Camera App Now Available on iOS (GOOG)

    Google's free app allows users to take 3-D panorama-style photos.
  3. Investing

    Why Jack In the Box Dropped 8% Last Week (JACK)

    It's becoming clear that we won't know JACK for a while.
  4. Investing

    Jack in the Box Crushes Q4 Profitability Estimates

    Shares of fast-food restaurant operator Jack in the Box (NASDAQ: JACK) sunk in after-hours trading after the release of the company's fouth-quarter and fiscal 2016 results Monday. This, despite ...
  5. Tech

    5 Predictions for Virtual Reality in 2016 (F, SNE)

    Discover the top five predictions for virtual reality (VR) in 2016, and why this is the year that it may finally get a mainstream introduction.
  6. Investing

    WestRock Boxes Up an Acquisition (WRK)

    One of the biggest names in cardboard, WestRock Company (NYSE: WRK), is getting a little bigger this week. On Tuesday, the company announced that it has signed a "definitive agreement" to acquire ...
  7. Investing

    Disney's U.S. Box Office Sales Top $3B Milestone

    Disney set an industry record by surpassing $3 billion at the U.S. box office in 2016.
  8. Investing

    Tech Favorites: AI, Chips, Big Data and Cyber

    Apple Inc. may get most of the recent headlines, but experts still see opportunity in a wide variety of leading technology stocks.
  9. Investing

    "Furious" Wins Box Office With $100 Million Debut

    The roar you heard this past weekend was The Fate of the Furious accelerating into the top spot at the global box office by a country mile. The eighth entry in the "Furious" car thief saga took ...
  1. How does the United States government measure economic growth?

    Find out how the Bureau of Labor Statistics and the Bureau of Economic Analysis measure economic growth in the United States ... Read Answer >>
  2. What are some limitations of the consumer price index (CPI)?

    Despite being followed so relentlessly, the consumer price index has its limitations and is an imperfect a measure of inflation ... Read Answer >>
  3. How can I find out if a company I like is included in an index?

    Learn how to find out what indexes include a company's stock. Determine the importance of predicting future price movement ... Read Answer >>
Trading Center