No single issue is impacting the printing industry more than the shortage of paper and the significant rise in costs when stock is available. So, on behalf of our print members, we wanted to ask the experts, where we are, how we got there and what does 2022 and beyond look like for our industry. On February 3, 2022. Upwards of 60 participants from over 35 different companies took part in a webinar hosted by Tony Golden of Lindenmeyr-Munroe Paper Co with presentations by Gilbert Goodworth of Domtar Paper and Mike Robinson of Verso.
While we are facing unprecedented challenges, the seeds for our current situation were planted years ago as demand for all grades of printing paper started to fall. The response on the part of the mills was to close some, reduce capacity at others, take machines offline, and in some cases, repurpose machines to produce products in growing segments like packaging. So, when demand increased in the latter part of 2020 and throughout 2021, at a time of lower overall capacity, unprecedented stress was put on the supply chain and that pressure included pulp, chemicals related to papermaking, and even things like lumber and nails for pallets used in the shipping of paper. It seemed that everything that could be a problem, became one.
While the current challenges cross all types of paper, the speakers presented two very different perspectives. Coated paper is heavily dependent on imports for well over 50% of production and the issues facing them include covid’s impact on the workforce, increase in demand, difficulties in the countries of origin and transporting paper through US ports. Uncoated is primarily made in North America and their problems differ only in that the paper doesn’t have to travel from foreign ports. The 2022 election season will further stress the paper supply, coated cover, in particular, the substrate used for many of the products associated with election mailings and handouts.
While concerns raised by the presenters included machines that are running beyond sustainable capacity, increasing trucking and maritime costs and shortages all along the chain including a significant shortage of truck drivers, there was some good news. Demand continues to be robust with Q4 2021 production 79,000 tons (5%) higher than Q4 202. The presenters shared some statistics about how print products have performed in the last year. There was a 6-9% increase in book sales over 2020, a forecasted increase in commercial print of 5.2-6.2% over 2021 and global direct mail is expected to grow from 71+ billion to 72+ billion in 2022.
Currently, almost every mill is on allocation/ reservation. There had been a ten-year, or more, lessening of demand for printing papers that the pandemic only exacerbated. While we are facing the perfect storm of chemical, pulp, pallet supply, shipping challenges, and Covid 19’s effect on workforce, demand increased and affected all grades of sheets and web grades.
At the time of this webinar, no mill can allocate 100% of past usage to their customers, and thus the guessing game each month is how much can the mill supply. It can be as low as 60% and there is little light at the end of the tunnel for the foreseeable future. All the experts on the webinar stressed that paper machine efficiency is critical and that all machines, coated and uncoated, are running beyond the safe range for sustainability. To add to the difficulties, some machines may have to go offline in 2022 for maintenance. Everything related to the manufacturing and bringing to market of paper has risen significantly since the start of the pandemic.
What can you do? Plan ahead with your clients, order well in advance, be flexible about grades and finishes and prepare for a challenging 2022. At present, there is little light at the end of the tunnel but be assured that the merchants and the mills are doing everything they can to help their customers thrive in, what continues to be unprecedented times!!