What do microchips, turkeys, and toilet paper have in common? The clue’s in the title…
We’re sure you’ve already guessed that we’re talking about shortages.
And although last year there was a somewhat incomprehensible panic over the supply of toilet paper, recently, there have been shortages of less trivial consumables and commodities, such as petrol, technological goods, foods and — print paper.
For about 2000 years, we’ve used paper to print just about everything — bibles, books, legal documents, letters, catalogs… The list is endless.
But since 2020, there has been a global paper shortage; retailers have either been late to distribute their paper catalogs or not sent any out at all.
And now that technology is fast rendering paper methods of communication less necessary, what’s the outlook for print catalogs in a post-covid world, coupled with the threat of climate change?
In this post, we explore the question: will the global paper shortage be permanent? We also look at the reasons behind the paper shortage and what you as a retailer can do about it.
How has the media reacted to the paper shortage?
Throughout September and October of this year, across continental Europe and the U.S., the global shortage of paper made headlines in national newspapers and online industry magazines:
- The Daily Mirror: Brits told to hit shops early for Christmas due to paper shortage and shipping delays
- Bloomberg: Paper Shortage Hits American Retailers When They Need It Most
- My Total Retail: Catalog Printing Schedules Are Disrupted for This Holiday Season
- Print Week: Paper Prices Keep Going Up and Paper supply crunch: buyers urged to plan well ahead
- One to One: Papiermanger: Digitale Katalog für das Weihnachtsgeschäft
Why has there been a global paper shortage?
The main reasons for the global shortage of paper are believed to be because of two primary and interconnected problems:
- Reduced paper mill capacities in Europe and North America.
- Higher costs across the entire global supply chain — such as for energy, logistics, and imports.
In North America, paper mills have reduced their paper production capacities and instead have increased it for cardboard boxes and packaging material to meet rising consumer and business demands for eCommerce.
Some paper mills in North America have had to close down completely, with staff and labor shortages spanning the whole supply chain.
In the case of printing costs, there are several contributing factors to the overall increase: higher energy-, import-, and logistics costs.
Inevitably, price increases have had to be passed onto businesses at every step of the supply chain — eventually hitting paper manufacturers and printers worldwide.
Major paper manufacturers are forced to add energy surcharges to customer orders.
In October, Sappi, a leading European manufacturer of coated graphic paper, confirmed a €100/tonne (£84/tonne) energy surcharge across all its products.
Other global paper suppliers have followed suit and added extra charges to specific paper grades.
To add more insult to injury, increases in shipping container costs have made importing pulp considerably more expensive for paper mills.
This combination of smaller paper mill output capacities and higher production costs have led to significant increases in paper price.
And for commercial catalog printers, this has meant that their costs have also increased, and when paper mills allocate how much paper each printer can get — they simply cannot produce as many catalogs as before.
Don’t just take our word for it, though. In recent statements, business leaders and spokespersons have echoed these paper supply chain woes (below).
How has this impacted retailers and brands?
Not only have retailers and brands been hit with increased catalog printing costs, but they’ve had to settle for printing on lower quality paper.
For retailers whose catalog printers have had a backlog of orders to fill due to paper shortages or have had to slap brands with order quantity limits, they’ve had to delay the distribution of their catalogs or not deliver any at all.
Retailers with deep pockets might have been able to stretch to higher printing and catalog order premiums to get them out just in time for the holiday season.
But is this a long-term, sustainable solution — when perhaps now, paper-based catalogs are fast becoming out-of-touch with changing consumer shopping habits?
Business leaders see the current global paper shortage as not just a short-term problem — but something which has a muddied and clouded outlook, which isn’t going away anytime soon.
What are business leaders saying?
Over the last few months, paper mills and printers have commented on the global shortage of paper in press releases.
Chief Executive Officer Miles Robers of DS Smith Plc, a London-based packaging maker with nine paper mills in Europe and two in North America, last September said:
“The paper market, as a market overall, is extremely tight. We’ve seen numerous price increases going through on paper. I wouldn’t be surprised if there were further increases because it is so tight.” — Source: Bloomberg
These price increases and prolonged shortage durations are echoed by catalog printing companies, such as by Nahan, a Minnesota-based catalog printing company:
“The average price of paper has gone up as much as 16% this summer, said Mark Groff, Vice President for Sales. Nahan expects the tightness to persist through 2023.” — Source: Bloomberg
And a spokesperson for Mondi Plc, a multinational packaging paper group with production sites across the globe, told Print Week last month:
“Throughout the year, we saw significantly higher input costs in our uncoated fine paper business, such as higher pulp, energy, transport, and chemical costs. Therefore, we have been implementing various price increases of our papers during the year.” — Source: Print Week
Print Week commented that there’s speculation Mondi is considering a €200/tonne surcharge (£170/tonne), but this hasn’t yet been confirmed.
UPM Communication Papers has also informed customers that the price rises announced in September will need to go up by “at least €50/tonne” from the beginning of next year.
Online catalogs can help you combat the problems introduced by the global paper shortage
Here at Publitas, we publish digital catalogs for retailers and brands around the world — we can imagine that you’re not surprised when we recommend that you go digital with your catalog!
With paper prices rising and sustainability becoming a focal point for consumers, it makes less sense to rely on print catalogs as a low-cost, sustainable marketing tool (think rising energy, petrol, and supply chain cost increases too).
That’s not to say that we think you should suddenly stop distributing your print catalogs and immediately switch to digital ones. Instead, it’s better to take a more measured and phased approach, where you build up the reach of your online channels first.
Moreover, a curated catalog or lookbook of your brand’s products is a powerful way of leveraging discovery marketing and capturing more top-of-the-funnel shoppers who need something that can give them more inspiration than the limitations of a standalone webshop.
Interested?comments powered by Disqus