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supply disruption

Forecast 2023: Paper Supply Chain Improvements

November 10 2022 | By Rod Lowe | Blog

For the past three years, the phrase “supply chain disruption” has become almost part of our daily parlance. This phenomenon that grew out of the COVID-19 pandemic affects everything from food in grocery stores to high-tech computer chips necessary in today’s advanced automobiles. Print service providers are well aware of the problems with the supply chain as they grapple with the difficulties in acquiring the paper they need for customer projects.

Particularly for mid-sized and small printers and publishers, the paper supply situation was worse than bad during the pandemic, acknowledges Daniel Dejan, principal/creative director at Dejan Associates. “Two years ago, some brand managers were forced to use two and sometimes three different paper grades for direct-mail and catalog projects,” he recalls. “China was shut down for two and a half months—and imported paper accounts for approximately 30% of what we use here in the states.”

In 2020, the lack of paper availability was very much about labor shortages, Dejan contends. “It was the longshoremen and the truck drivers, remember?” he asks. “People got sick from the virus, and things snow-balled.”

But fret not: Relief is in sight, predicts Dejan, who has worked with Sappi* Fine Paper North America for decades as the face of its education, training, and consulting group. A designer by trade, he is a self-proclaimed lover of all things graphic arts, especially ink on paper. “The severity of the situation has subsided,” he assures.

“The mills are back up now and cranking at capacity,” Dejan notes, “and all the freighters are getting in [to shore]. Paper is on trucks.” However, print project managers still need to build in the necessary lead time: Plan ahead and order paper now for 2023 Q1 and first-half projects. Don’t make the mistake of procrastinating, he warns! To facilitate more accurate scheduling, printers can employ online ordering portals, which can be useful when gauging the availability of certain paper grades.

Some industry observers contend the paper supply issue will continue through at least mid-2023. The problem with that prediction, according to Dejan, is the proverbial “supply chain” involves multiple moving pieces. “It’s quite complex,” he explains. Labor, shipping logistics, and raw materials are three big spokes that all are part of the supply chain wheel.

These are three separate issues with varying degrees of magnitude. “And each requires a different solution,” Dejan adds, pointing out that manufacturers in the United States and throughout the world are still catching up on the shortage of chips that run cars and trucks. That problem, of course, represents the shipping side of the challenge. “It’s the domino effect,” he says, “but not all these dominoes are the same size!”

For good measure, Dejan throws a fourth problematic area onto the game board: mergers and acquisitions. “There are a lot fewer mills now,” he reports, “which has changed the landscape.”

Looking Back … and Ahead

Don’t be naïve, Dejan urges, when it comes to paper-buying realties. During the pandemic, “larger printers and publishers bought over-stock as soon as it became available,” he reports. “Those companies that have cash can buy what they want, when they want it. Mills were buying every pound of paper they could get to fulfill their large contracts with publishers and catalogers.” This may be the way of the business world, but it created a major issue by taking paper off the market, he adds.

When consumer buying habits began to change (even before the pandemic hit), there were so many mill closures, including Sappi, Dejan remembers. “The Amazon/Wayfair/Overstock.com online shopping effect dates back at least 10 years,” he surmises. To meet growing packaging demands, many mills moved production over from fine printing papers to board and corrugated. “It takes two to three years to modify a paper machine to do it properly,” he informs.

The lesson here is that there will always be issues that affect supply. COVID isn’t over, but the virus and its variant’s effects on the labor force are not as big as they once were. What’s next? More unionization? The 2024 election is coming, so fasten your seatbelts!

*Sappi Limited (originally incorporated as South African Pulp and Paper Industries Limited in 1936) operates globally. Sappi North America, headquartered in Boston, has four paper mills—in Maine, Minnesota, and Canada — along with a dedicated technology center, shared service center and sheeting facility locations.