The Pallet/Cardboard Box indicators are straightforward and rather logical. Basically, the higher the demand for corrugated boxes and shipping pallets — necessities when shipping products to customers — the higher the demand for the products being shipped.
Today, virtually everything purchased on a large scale at some point was in a box or shipped on a pallet. Known followers of the cardboard box indicator include Alan Greenspan, who was known to look at cardboard box numbers, among other things, for insight into shifts in the economy.
In today's down economy, numerous businesses in the corrugated box industry are posting losses. Among them was European firm Smurfit Kappa Group PLC, the continent’s largest producer of the cardboard boxes. Smurfit’s revenues fell by $269.9 million in 2008 from 2007, with operating profits falling 50 percent, according to company documents.
It seems the cardboard box indicator can give some pretty reliable insight into the ebbs and flows of the markets. In a similar approach, many look at the transports to prognosticate that increased shipping implies a growing economy.