APS22 is pleased to share Millcraft’s insightful article on global supply chain issues and the opportunities and strategies you can leverage as your business plans the balance of 2022 and into 2023. Be sure to watch their video on forecasted price increases for 2022.
Gain industry expertise and calculated insight on what commercial printers can expect moving through 2022 and discover your greatest competitive advantage in today’s printing papers market.
Spoiler: Yes, there will be price increases in 2022. However, knowledge is powerful. Having facts and supporting data can help you plan how to best maneuver in today’s market.
In this much anticipated 2022 paper industry update*, Millcraft’s Chief Operating Officer Greg Lovensheimer says, “You have to understand the dynamic, because today’s market is not necessarily ‘What’s the price?’ It’s ‘Can we get allocation?’’’ Greg points to supply chain partnerships as crucial in 2022 and says that merchant partnerships will be a business’ greatest competitive advantage in the coming months.
Current North American Inventory Levels
“The reality is, as an industry, there’s no more inventory to give. There is no buffer. We’re now what I call ‘riding on the rails’. There’s no inventory to support, to shock absorb, if you will, and everyone feels that down the line. It’s an indicator of how tight the market truly is, and I don’t see it getting better any time soon.”
- Record low inventory: The number of tons available in the total market in 2019 was 530,000 tons; today it is less than 130,000 tons.
- Increased demand: 2022 includes a highly contentious U.S. midterm election; expect an increase in demand for political printing. This extra area of pressure in an already tight market will keep the heat on availability and force printers to choose as they won’t be able to say yes to all the jobs coming in the door.
Factors Impacting the Global Supply Chain
“We live in a global world right now, and things that happen in the nation and around the globe absolutely do affect us.”
- Potential implications of Covid: Vaccination rates, therapeutic drugs that could potentially help keep people in the workforce, then – the next variant? Covid continues to have a direct tie to labor.
- Labor tightness: Many people, including 7 – 8 million women, are not in today’s workforce. However, at the end of 2020, U.S. citizens had $5 trillion in amassed savings; by the end of 2021, the amassed savings were gone. People will need to go back to work because savings are gone and inflation is rising; the federal reserve calls for three interest rate hikes in 2022. Labor tightness may ease in 2022, but not until the third quarter.
- Natural gas is up 600% in Europe which will secondarily affect the U.S. and raise prices; Greg advises companies to keep a close watch on interactions between Russia and Ukraine and also China as leader Xi Jinping seeks a third term in power.
Opportunities to Look For This Year
“Supply chain partnerships right now are critical. Quite candidly, moving forward, it’s about the value of that supply chain. Who are your partners? Who’s your mill, who’s your merchant, who’s working for you, and who are we aligned with?”
- Recognize that if you’ve been given allocation, that alone in 2022 is an advantage–feel emboldened because you’ve got product to sell.
- Reduce complexity to improve your likelihood of allocation; narrow in on bases weights, colors, sizes, and finishes to open a bigger opportunity window with more suppliers.
Learn to forecast and share that forecast with your partners. The absolute best way to ensure you’ve got a source of supply is your ability to say, “Here are my orders for the next 4 – 6 months, or we need less this month but we’re going to need twice as much next month.”