Unrest in the Paper Industry

Your usual copy paper may have been on backorder when you tried to buy some recently and you may have asked, "What's going on with paper?"  A lot, actually.  The paper industry is in a bit of an uproar right now, at least as concerns uncoated white paper.  Demand exceeds supply and the market is getting tight.

Of course, the logical next question is "Why?"  

There are several factors in play right now, which are affecting both the price and the availability of paper - freight costs, pulp price increases and capacity.  Let's examine each of those:

Freight Costs - If you ship anything via FedEx or UPS, you know that rates go up pretty much every year.  Other common carriers are no different.  Add to that the fact that current demand exceeds the available trucks and you come up with a nasty situation.  You see, a new system was recently implemented in the trucking industry to keep track of driver hours and it keeps the truckers to no more than 12 hours on the road daily, resulting in fewer deliveries being made each day.  Plus, many smaller trucking companies have closed because of the extra costs associated with complying with the new requirements.  Their closings add to the shortage.  There is more demand for trucking services than there are drivers/trucks.  Shortages = higher costs.

Pulp Price Increases - Global pulp shipments have increased more than 4.8% in the past 12 months, but the percentage of pulp going toward the production of uncoated white paper is decreasing.  The paper industry is seeing a higher demand for liner board, towel and tissue, which increases the demand for pulp and puts pressure on the supply.  Shortages = higher costs.

This leads to the third contributing factor.

Capacity - With the higher demand for liner board, towel and tissue, several mills have converted, or soon will convert, from white paper production to liner board production and this has driven costs up.  Boise and International Paper have both announced conversions scheduled for 2019.  Georgia Pacific closed a mill in Washington, which eliminates 166,000 tons of copy paper.  The market is becoming so tight that mills are not looking for new customers. They are concerned only with being able to supply their current customers.  Shortages = higher costs.

So where does that leave dealers?  Pretty much in watch mode. How long will the shortage last?  We don't know for sure.  The situation is changing rapidly and dealers are caught in the middle of trying to accommodate their customers at reasonable pricing.  Rest assured that at Office Express we are doing everything we can to minimize any increases and keep supply levels steady.

Source:  Trimega Chronicle