We’ve seen the likes of toilet paper shortages and most recently fuel, but now there’s a new shortage on the horizon, paper. There’s no easy way around it, there are supply chain issues all the way from trees to transportation and everything in between. So, what does this mean for the print industry?
In short form, the cost of paper is increasing. With an increase in demand coupled with an array of supply chain issues including shipping and lack of raw materials, it’s no wonder that we’re seeing paper costs rise. Sources show that in August, paper cost 50% more than it did in 2020, rising by another 30% in December, with signs of another rise of 20-30% in January 2022!
Where are the shortages and price increases coming from?
Starting at the very top of the supply chain is materials and mills. Paper pulp, which is used to make a whole host of print-based materials, is at a shortage. Produced in mills, this essential product’s production has slowed due to a combination of both worker shortages and the material being depleted on packaging products during the pandemic. Alongside a shortage in materials, there have also been cuts in production and the closure of paper mills due to a rapid drop in demand, again, caused by the Covid-19 pandemic. The last two years have decreased the need for print materials which has caused several mills to reconsider their stance in the market. Many of which are turning to packaging and turning their backs on paper.
Mills that have continued on with the production of paper are now overwhelmed with demand. With a shortage in staff, materials, and a reduction in mills as a whole, the pressure is now on for those who are operating, to produce an increased amount of paper, especially as we move towards the festive season. This, in turn, gives mills the margin to increase their paper prices. It has been reported in various places that from the start of 2021, there has been a paper price rise of at least £40 per tonne for both Kraft and recycled papers.
Moving down the chain, getting paper from the mills to the desired destination without a hitch is proving rather difficult. From the Evergreen getting stuck in the Suez Canal to a shortage in HGV drivers, a streamlined delivery is far from reach. As well as shipping issues, container prices are now up 900%, which is another cost to be factored into the supply chain. Something else to bear in mind is Brexit. A lot of shipments getting stuck at customs due to new Brexit formalities which are making the whole shipping process a lot more time-consuming.
What does this mean for print?
Paper is in demand more than ever and prices are reflecting just that, with prices in the supply chain increasing, these costs will more than likely be passed down until they reach the end-user. A Printweek readers study revealed that 14% of businesses will absorb the new prices, 11% will look to mitigate costs in other ways and 75% will pass on the price increase to customers. Businesses will more than likely increase their prices over the coming months so it’s important that they don’t lose sight of what’s important. Customer’s happiness and quality products.
What’s next?
With a lot of uncertainty in the industry, being reactive and keeping customers in the loop has never been more important. It’s always better to be transparent with customers and help them understand what impact the situation is having and consequently what the impact will be on them, this is applicable from the mill to the end-user. Planning is also a key factor in dealing with the paper shortage situation.
Just like many other industries that have been impacted by Covid-19, material shortages and shipping, it’s a case of seeing what happens next. The current climate is incredibly unpredictable, but with clear communication and keeping up to date with industry news, you can give yourself the best position.
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