On Wednesday May 4 from 2 pm to 3:30 pm, the Canadian Printing Industries Association (CPIA) held what was arguably one of its most timely and relevant webinars to date. “Addressing the Paper Supply-Chain Challenge” featured valuable insights from industry leaders representing Spicers Canada, Domtar, Lecta North Amercia, the Pulp & Paper Products Council – and leading Canadian printers Advocate Printing, Cober and Friesens. Special thanks to Richard Kouwenhoven (CPIA Board Chair), Gerry Lacombe (CPIA Association Manager) and webinar host Bob Dale of industry recruiting firm Connection for Results, for their efforts. Special thanks also to panelists Cory Turner (Spicers), Rob Melton (Domtar), Alain Villemure (Lecta North America), François Chastenet (Pulp and Paper Products Council), Andrew Fennell (Friesens), Sean Murray (Advocate Printing and Publishing) and Todd Cober (Cober Printing) fo their time and valuable insights.
Here are some key points and takeaways from the event:
• Reasons for the current paper supply-chain shortages vary by continent but are extremely complicated and inter-linked
• Average delays at worldwide ports are running from 20% to 40% more than previous years
• Demand for paper, due to the pandemic and increased digitization, has declined by 17% since 2019, while capacity to produce uncoated freesheet is down 22% for the same period
• Paper mills and suppliers, due to falling demand, have had to make tough decisions in order to survive, while deciding on which types of stocks bring in the most revenue
• This falling demand is expected to continue into 2022 but should recover somewhat in 2023
• Factors contributing to the chaos in North America (as well as in parts of Europe and Asia) include lengthy delays at ports, lack of truckers and strikes (i.e. labour shortages) and the huge rise in shipping-container costs (from $4,000 – $5,000 in 2018 to $15,000 – $20,000 today), to the excessive costs of energy and fuel
• While all these are contributing factors, in Europe and North America, demand is exceeding supply, while in Asia demand is currently below capacity and paper supply is lighter
• Expect suppliers to roll out more paper grades for packaging than for commercial print
• Every panelist predicted slow improvements to these situations – but not until 2023.
So what should commercial printers do?
Here are some coping strategies were suggested and being utilized:
• Keep in closer contact with your paper suppliers (who are themselves keeping in closer contact with the paper mills) and monitor the supply situation daily or weekly instead of monthly
• Diversify and investigate other suppliers as some may have access to certain paper grades that others do not
• Be prepared to work with less paper categories as supplies of some stocks have dropped by up to 50%
• Selling on price was always a bad idea and is even less effective now – so convince your customers of the value of your relationship and that you will be a reasonable and honest partner during all this chaos
• Use standard sizes and paper grades as much as possible and convince your clients that, given the supply-chain situation, they are viable alternatives to specialty stocks
• Remain creative in your choice of paper and try to convince your clients that many projects simply cannot be done using stocks they’re used to, or ones currently in short supply
• Call your core customers and repeat clients and keep them informed of the evolving supply-chain situation while having blunt conversations about pricing and expected delivery
• Anticipate what your customers may want several months in advance rather than days or weeks, and be proactive in ordering stock well ahead of time
• Emphasize that this is a global problem that will likely not get resolved entirely until 2023
• Make your clients understand that job choices must now be made based not on creative design or other similar factors, but on paper availability
• Remain positive and upbeat – and use this moment to nurture closer ongoing relationships with both your clients and your suppliers, realizing that “we’re all in this together”