Current State of The Industry
Paper supply is vital to the health of the print and direct mail industry. The COVID-19 pandemic continues to upend global supply chains and impact operations across all areas of business. The paper industry is no exception. Without this key resource, the expression “stop the presses” takes on new meaning, literally.
The good news is that the desire to reach consumers in their homes using direct mail has skyrocketed. Unfortunately, this combined with other factors has caused a worldwide paper shortage.
This new reality has “sent shock waves through the industry and created a mad dash as printers fight for resources.”
How Did We Get Here?
Throughout the Pandemic, the need for personal hygiene products and packaging papers increased. Simultaneously, the demand for graphic arts papers decreased as companies marketed less during the shut down period. Mills adjusted their production lines to produce the products with the highest demand and sold “off inventory” for the lower demand products.
When the economy reopened, demand for graphics arts papers surged! Mills are now facing the balancing act of producing multiple product lines at record rates. Inventories are depleted and there just aren’t enough production hours to keep up with the current demand. Combine this with the nationwide labor shortages, import delays at our nation’s ports, and transportation logistic issues – the situation has grown dire.
This new reality has “sent shock waves through the industry and created a mad dash as printers fight for resources” says President and CEO of The Mailworks, Brianne Baggetta. The impending holiday season only makes securing stock especially difficult with the rise of online shopping, as many mills have converted some to most of their manufacturing lines to make corrugated packaging papers.
What The Future Looks Like
Currently, there is not enough paper to meet the demand. Unfortunately, the market is not expected to return to normal until mid 2022 or even the beginning of 2023.
As a result, mills are tightening allocations (the amount of paper allocated to each customer). They are working with existing customers to try and get them a percentage of what they usually order. In addition, prices are raising across the board. These limitations put a heavy strain on most businesses’ ability to serve their clients, leaving them searching for alternatives to meet their needs.
Helena Nichols, Procurement Specialist at The Mailworks has been working around the clock to secure stocks, even if that means reaching out to new vendors. She’s had to think outside the box, saying “It’s broadened our perspective on how to source our supply needs. We are building new relationships with mills and paper distributors, strengthening our ties with current suppliers and more than ever, planning and communicating frequently. We are working to be more strategic than tactical when sourcing for supplies.”
Industry experts still recommend planning as far in advance as possible to secure deliveries. They also note as a general consumer, this shortage will reflect far wider than the print industry. Expect to see limitations and price increases on common goods such as wrapping paper, toilet paper, boxed goods, etc. When asked about The Mailworks approach for the future, Baggetta shared, “Our goal is to secure as much of our primary stocks as possible, while finding cost-effective alternative paper stocks for our customers.”
The Mailworks will continue to stay ahead of this situation as much as possible by planning with customers and forecasting future needs. We recommend you plan your marketing budget for the coming months proactively.