What’s the Status of the Paper Industry?
There’s no doubt that the paper industry has suffered as a result of technological advancements. Devices such as computers, tablets, and smartphones have become more accessible in recent years, allowing children to complete school assignments, professionals to work remotely, and seniors to read a newly released novel. Then, as global commerce shut down due to the COVID-19 pandemic, all industries were affected, including paper production, in some shape or form.
In turn, the already low demand of paper supplies plummeted further, thanks to online learning and working from home. If the demand for paper was low, why are prices higher than ever? Why are paper and mail hard to access? How are companies handling the situation? A history of the paper market in addition to recent trends can answer these questions.
Supply and Demand in the Paper Mill Industry
Poor Inventory Management
Prior to the pandemic’s emergence, the paper industry as a whole failed to properly manage inventory. For instance, major paper mills continued to produce, even when no orders were upcoming. Further, distribution centers held inventory, as did merchants. Printers carried less than a week’s worth of paper for their jobs and relied on prompt less-than-truckload deliveries from manufacturers, an unsuitable process.
The excess of paper inventory and lowering consumer demand led to significant market changes. As the industry adopted Enterprise Resource Planning (ERP) solutions, more suppliers began to free up cash previously tied down by inventory. At first, paper mills across the country were completely shut down. However, as demand for paper products increased with the rise of e-commerce and social media influencer “unboxing,” existing suppliers shifted toward their plan B: packaging.
More Demand, Less Supply
Due to substantial paper mill closures in the early 2010s and gradually rising demand, suppliers had no choice but to raise their prices. However, the price fluctuations don’t stop there. With few coated paper (flyers, postcards, magazines) manufacturers left in North America, those on the west coast must rely upon imported goods, which poses a risk. Although more companies are now producing uncoated freesheets (standard copy paper), any seasonal influx or unforecasted demand adds increased strain on the industry.
Current Paper Production Risks and Impacts
The remote environment is highly sought after by today’s workforce. As a result, few companies have returned to the office following the initial stay-at-home orders. However, numerous executives are creating and implementing plans to resume an in-person work environment. Since in-office work tends to utilize greater amounts of paper, whether that be through invoices, checks, envelopes, or others, suppliers are stretched thin.
Additionally, the labor market itself is experiencing all-time low numbers. Workers everywhere are quitting, leaving, entering a new industry, or transitioning to freelance work. The imbalance creates issues in the paper production process, as human labor is essential at every stage. Therefore, the low supply and increasing demand is further exaggerated.
Cost pressures continue to mount from an ever-changing global market. Transportation is more expensive than ever before, due to an uptick in oil and gasoline prices. Further, imports are at a standstill, whether that be due to conflicts overseas or the skyrocketing costs to ship. The effects from closed ports and shut down pipelines can be felt in every industry’s supply chain.
How Arkansas Mailing Services is Mitigating Paper Production Risk
According to the American Forest & Paper Association, 39% of paper-based communication in the United States is processed through the mail system. Therefore, it’s critical that our country maintains a healthy ecosystem. All crucial players need to be proactive and flexible, ranging from the postal service down to printers and end users.
At Arkansas Mailing Services (AMS), we acknowledge the current issues and risks within the paper mill industry. As a full-service print and mail outsourcing company, we’ve experienced the volatilities of the global market firsthand. Although current supply and demand has led to increased costs, we’ve placed an emphasis on purchasing additional inventory when it’s made available, so you can be confident that your pieces will be printed and delivered smoothly.
Our company has stressed the importance of choosing the right supply chain partners, and we’re dedicated to stay both proactive and prepared with our products and suppliers. We understand that the current industry status has negative connotations, but we believe in the value that physical mail and deliverables have on consumers. In fact, direct mail marketing campaigns have the highest return on investment (ROI) compared to promotional emails.
Gain a Competitive Edge Today
The current status of the paper industry has caused numerous companies to hesitate on their next direct marketing campaign. However, the added value that a healthy, active mailing system has to businesses like yours can’t be ignored. Although tempting to rely upon technological substitutions, it can’t compare to the personalization and one-to-one communication that mail provides.
At Arkansas Mailing Services, it’s our goal to be your one-stop-shop for all printing and mailing needs. Fewer voices in the paper and mailing market enable your campaign to stand out from the rest. If you’re wanting a competitive advantage in today’s fluctuating market, look no further than AMS. Contact us today for a free quote.