How does one predict containerboard demand going forward?
Ever since I can remember, and I have been in this business fifty years, the PMI (Purchasing Managers Index) has been a faithful leading indicator of future containerboard demand. The old saw was this, "make a refrigerator and you need a box to put it in."
No more. Jeff Bezos and Covid-19 have broken this link.
Most likely, the new indices to watch are Amazon stock, Fedex stock and United Parcel Service stock, up respectively 60%, 93%, and 45% year to date as of this writing.
You might also want to look at Fedex and UPS announcements concerning putting shippers on allocation for services (there are some) or their announcements concerning adding planes and trucks to their fleets. And, of course, in this area you'll also want to look at Amazon's own build out of their fleet of planes and trucks.
Anecdotal data. I ordered a printer through Amazon, scheduled to arrive on 27 Nov 2020. As of this writing, it is still stuck in a UPS facility in Waukegan, Illinois, waiting for space on a plane or truck.
Another anecdote. We have elderly relatives in a very small town in Indiana that have been ordering items like toilet tissue and kitchen roll towels from Amazon, rather than drive one mile to Wal-Mart. They have been doing this for several years. Why? Price is lower and they don't have to handle the product for that last mile--Amazon puts it on their front porch.
When will the shipping bubble burst? Amazon still has only 7% of the retail business in this country.
Want to get more sophisticated in your analysis here? Look at the nascent but burgeoning delivery businesses of Wal-Mart and Kroger's. They are just waking up to the trend.
