Where Do We Go From Here?

As we move from a pandemic phase to an endemic one, the U.S. economy continues to be surprisingly resilient. However, It’s no secret that the national economy is suffering some tension due to a variety of unexpected global supply chain stresses. The printing and graphic communications industries are not immune to this, and we are experiencing our own unique supply chain issues as well.

Paper production for printing, amid the digital revolution, has been experiencing slow declines for years. Last year, however, in a post 2020 environment, it became clear that paper mills had severely underestimated the demand for paper. Unfortunately, ramping production back up was not as simple as initially thought, and has been complicated by a variety of compounded factors that include:

  1. Lumber Shortages and Forest Industry Competition: Demand for all types of wood-based materials is high, and the paper industry is competing for raw materials with other adjacent forest product industries – including construction. As anyone who has recently attempted to purchase plywood or other wood-related building materials can attest, the costs are soaring.
  1. Demand for Paper is Outpacing Supply: Economic recovery has been much more robust, post-pandemic, than many had anticipated, including many paper manufacturers, who made long-term inventory and staffing level decisions months ago based on a more pessimistic outlook – an outlook which never came to pass.
  1. Transportation Challenges: Ports of entry are struggling with congested backlogs. Crude oil prices and container prices have also increased, and delays and pricing continue to increase rapidly. With these and other challenges facing international shipping, such as labor shortages, paper shipments coming in from overseas are taking longer and are more expensive. In fact, according to PPPC data from Fastmarkets RISI, 30% of North American coated paper is now imported (an all-time high). Understandably, what paper that is available will now increasingly cost more.

“What we’re experiencing now is a perfect storm – global supply chain issues continue to have an impact on paper, North American capacity has been taken out or converted to other products and the ever-present labor shortage continues to affect production. The hope is that supply will be more stable and predictable Q2 of 2023, but depending on world market conditions and geo-political situations, a tight supply chain may continue.

A few idled paper machines have come back online, but no new capacity is expected. In the meantime, planning and forecasting is paramount in the current paper supply environment.”

Mike Davoran
Vice President/Regional Manager, Millcraft

The pandemic exposed numerous global supply shortcomings for all industries. Becoming a shared experience for everyone, the ramifications for the printing industry, however, have become particularly discernible. Here are a few recommendations on how we can all prepare to mitigate the supply chain issues:

  1. Proactive Diligence and Control: Graphic Village will continue to work diligently to ensure that paper and ink needed to produce your items are in stock whenever possible. We will continue to work with our suppliers to control input costs to the maximum degree possible.
  1. Forecast Your Demand for Paper: Having a solid understanding of your print buying patterns puts us in a stronger position as we survey the paper landscape for resources and supply. Forecasting allows us to increase inventory levels on core items and proactively negotiate with suppliers.
  1. Be Flexible and Order Early: Good communication with us, combined with early ordering, will help prepare you for market fluctuations. If your favorite paper stock isn’t available, consider accepting a stock of another weight, finish, or hue. The situation is temporary — be patient. Your favorite substrates will return.

We are hopeful that the supply chain issues will begin to resolve next year. In the meantime, let’s hang in there together. Through patience, collaboration, forecasting and proactive inventory control, we will be able to help soften any additional economic impacts, or even help you pivot entirely in order to avoid unexpected obstacles.