Have you ever heard of the annual tongue-in-cheek list of the most overused English words that Lake Superior State University publishes each year? It's usually spot on. For 2021, "supply chain" is on the list. We can relate. Can you? One analyst remarked, "Supply chain issues have become the scapegoat of everything that doesn’t happen or arrive on time and of every shortage." Again, we relate.
The issue is so prevalent, the New York Times has appointed a reporter to cover supply chain issues. Fortune reported that 94% of Fortune 1000 companies had supply chain disruptions due to COVID-19, and 75% reported negative impacts on their businesses. The print industry is no exception and has seen significant shortages of paper and ink as well as delays in the shipping of available materials. Experts predict these issues will continue well into 2022 for many reasons. Let’s break them down.
What caused the problem?
As much as we want to condemn COVID, the pandemic is not entirely to blame. Robert Handfield, the Bank of America professor of supply chain management at North Carolina State University, said in a LA Times article, “warehouse, distribution, and truck driver shortages were bad before COVID.” Layer in factory closures, global shipping delays, and labor shortages up and down the supply chain all due to COVID, and we have the "perfect storm" of a disaster said Nick Vyas, executive director of the Kendrick Global Supply Chain Institute at the USC Marshall School of Business in the same article.
Disruptions Affecting the Printing Industry
These disruptions in the supply chain have resulted in increased costs on paper and ink. There are also shipping delays to contend with, not only from manufacturers but also with deliveries of finished products to customers. Significant disruptions in the supply chain and a labor shortage made worse by the pandemic have caused many U.S. businesses to see delays in their print orders.
At the beginning of the pandemic, when many businesses shut down or slowed significantly, there was a decrease in demand for the in-store and marketing materials we create and print, like brochures, mailers, or POS signage. Now with many businesses around the world back open, we are finding that print marketing materials are in high demand. However, the materials and labor to produce and deliver them are scarce.
All of these shortages are driving up prices. The cost of raw materials has increased. According to NBC's Today show,wood pulp has gone up 50.2% over the past year, which drove the price of paper up 14.2% in the same period.
For commercial printers like Phase 3, the biggest issue, other than the price of paper, has been the difficulty in finding specialty papers for custom orders. With some mills converting to cardboard and others shutting down altogether, more than 2.5 million metric tons of North American printing and writing paper capacity has been offline since the start of 2020, according to Kevin Mason, managing director for ERA Forest Products Research. Normally we would find paper supply in other countries, but prices and demand are soaring over there as well, not to mention the supply chain delays occurring at overseas ports and trucking facilities.
Today, global supplies of certain paper products are so tight that many printers can’t get the stock they need “at any price,” Mason said. Some experts say this paper shortage could last well into 2023. “It has been a challenge to find the uncommon sizes, and in some cases, the paper all together. We have been keeping an eye on certain materials, like paper, resin-based sheets like PVC and styrene, and corrugated packaging. It’s a battle we fight every day, just trying to stay one step ahead of the need,”states Helen Hart, Vice President, Supply Chain Management & Supplier Diversity Manager for Phase 3.
Printing ink supply is also tight for many of the same reasons as paper, including transportation cost increases, shifting demand, and supply chain constraints. In general, the typical UV inks we use every day are on production delays, and specialty inks are becoming more difficult to find.
InkWorld Magazine reports the major imbalance in the supply and demand of the raw materials used in producing ink is due to factory shutdowns in China, bad weather in Latin America and the United States, and the rising cost of raw materials. Also, the same shipping constraints affecting other imported goods are making it difficult for manufacturers to ship their ink to printers around the world.
Not only are we seeing delays with raw materials and other necessities from overseas, but we are also experiencing local delays in shipping for our business and our customers. The USPS has increased their flex days, which means all first-class letters, flats, and catalogs will go from 1 to 3 day delivery to 1 to 5 days with no guarantees as to when they will arrive. But these delays are not just happening at the post office. Many freight companies are experiencing driver and truck shortages, causing delays across the country.
FedEx has suspended all money-back guarantees and is being more stringent on their size restrictions and pickup limitations. Despite investing in 21 new terminals across the country, FedEx has been unable to fully staff due to labor shortages. Additionally, companies are experiencing delays with their daily pickups as drivers are stretched thinner than ever.
“At Phase 3, we have been lucky enough to rely on long-term partners for both freight and parcel shipments,” said Hart. “We have seen delays with individual shipments making their way through the system but have been able to work through several systemic issues with our partners.”
Given these shortages, delays, and price increases, what can we do to stay on track?
What to do in 2022
These supply chain issues will not just go away. Some industry experts forecast the current environment will not change until 2023. But with planning and collaboration, we can make 2022 a successful year for all of us.
Here are five tips to follow when planning your printing projects with Phase 3.
- Plan ahead. Your project may take a little longer than usual. Give your account manager a heads up about any upcoming projects so we are ready to go when you are.
- Understand that prices may be higher for some jobs due to increased materials costs.
- If you produce a lot of material each month, consider ordering stock materials in advance to save time and money. Again, your account manager can advise you about the best course of action.
- Be very clear with us on your expectations, budget, and needs. If you have some flexibility, let us know and have a “Plan B” in place.
- Factor in some extra time for us to order and receive your materials and for shipping or mailing time when planning your projects.
Given the current environment, we must work together to build a strong and collaborative relationship. Phase 3 is ready to work with you on any print project you've got planned for the new year. Give us a call today.