The Paper Chase Challenge

Has paper buying changed for print service providers (PSPs)? Yes and no.

“How we do it really hasn’t changed, but I have to work harder at it,” said Chuck Dahms, of MidAmerican Printing Systems, Inc., a mid-sized company in the Chicago suburb of Schiller Park, Ill.  This seasoned purchasing manager has four decades’ worth of ink under his fingernails and industry experience under his belt.

These days, it can take Dahms twice as long to secure paper for his firm’s presses, which run both offset (approximately 70% of sales) and digital work (about 30%).

“There are more headaches,” said the jack-of-all-trades who handles mailing and customer service duties, too.

Sometimes, suppliers may not have enough paper in stock for a given order. Late last winter, for example, Dahms had to shop around to fill an 18-skid order for a poster job.

Frank Smith can relate.

“We used to have 14 or 15 price books in the ‘old’ sheetfed-only days 25 years ago,” Smith said. He is the procurement director for SG360º, which is part of the large, $290-million Segerdahl Group based in Wheeling, Ill., also near Chicago. Back then, myriad distributors “stocked paper, which was readily available [the] same day or overnight.” That, of course, was before all the print-industry consolidation. 

Now, he says they deal with three merchants: primarily Lindenmeyr Munroe, Midland Paper and Veritiv Corp. The latter company is the result of the 2014 merger of Unisource and xpedx. These “big three” have gotten smarter, Smith said, realizing that “they can’t be all things to all people.” Now, there’s a frequent-use focus on items that turn faster, so they stock only what customers need. However, the downside is that obtaining orders “can take anywhere from a couple of days to three weeks,” depending on the paper specified.

There is much more supply-chain visibility today than 15 or even 10 years ago. Buying in advance and placing fewer inventory orders has been trending for a while, said Jeff Pfister, Veritiv’s marketing director of print management/strategy. Job to job, there is a lot of phone and email correspondence between distributors and paper buyers at printing companies, “as well as a fair amount of EDI [electronic data interchange] transactions. Most of these customers are from small, medium and large printers,” he said, adding that many are local and family-run. Veritiv stocks popular offset and digital paper grades, including inkjet sheets, inside its 125 warehouses across the United States.

For the SG360º sheetfed schedulers, getting jobs on press takes “more planning than ever,” Smith said. “There always has been three- or four-week lead times on the web-offset side of the house,” but production teams now need to build in extra time for sheetfed jobs. No printer likes idle presses, but the days of “going on press tonight” are long gone, said Smith. “It’s not happening like that anymore.”

What are printers buying?

Personalized output remains popular, according to Vertitiv’s Pfister, which is why the merchant keeps a variety of digital and inkjet papers in inventory. Thanks to transactional printing, the pandemic didn’t hit uncoated grades as hard as coated, he said. The Pulp and Paper Products Council (PPPC) reports that, in North America, coated wood-free paper demand decreased by more than 22% in 2020, while orders for uncoated, cut-size stocks were down about 18%.

MidAmerican Printing still buys its share of coated paper in text basis weights ranging from 60# to 150#, according to Dahms. Offset “house sheet” sizes range from 23x34” to 24x36” for book work on its six-color KBA Rapida offset press, he said, adding that the need for 28x40” sheets is rare. For shorter runs, an Itek 3985 two-color machine (12-½ x 18”) is ideal for short run work.

To feed its Xerox iGen digital press, “I’m having trouble finding 14x20” sheets right now because the mills have eliminated it,” Dahms said. More common is the aforementioned 12x18” format. He runs six-pagers on 14-1/3 x 26” and postcards on 13x19” sheets. The firm runs about a 50/50 split between coated and uncoated papers.

Meanwhile, SG360º favors coated-free text and cover grades, which account for approximately 70% of Smith’s paper purchases. They run HP Indigo digital presses. Sheetfed basis weights go from 80# to 100# and 120# to 24-pt. grades, he said. Most web-offset jobs run 9 pt. and under at a separate facility in Broadview, Ill., acquired from Lehigh Direct (Visant) seven years ago.

“The mills did a good job of balancing last year during COVID-19,” said Pfister at merchant Vertitiv. “The demand simply was not there.”

Because paper manufacturers reduced capacity in 2020 (see below), he warns print firm owners to brace for price increases, which already have begun and may fluctuate depending on market dynamics.

“Demand his better now,” Pfister said, “and capacity is being challenged from an availability standpoint.”

Prices of coated grades could rise between 5% and 10%, he believes, while uncoated prices will hover around a 5% increase.

This appreciation will continue throughout the second half of the ’21 calendar year, predicts research firm Fastmarkets RISI.

Dannah Burgess, senior marketing manager for paper manufacturer Neenah, Inc., has noticed two buying trends.

“One has been continued growth in the importance of sustainable products for all kinds of applications," Burgess said. "Paper itself is renewable and gets even better when additional certifications or recycled content are added.

“Second, printers have been diversifying their product purchase beyond commercial print into both packaging and wide-format applications. We’ve seen these two trends merge as more sustainable paper products are used across packaging, signage and other applications.” (See sidebar.)

Supply-chain disruptions

The global coronavirus pandemic has had a detrimental effect on the supply chain, especially in the second half of last year.

“There were a lot of breaks in the chain,” said MidAmerican Printing’s Dahms, who remembers the mad scramble with suppliers on the phone and via email as domestic paper mills downsized and shut down machines. “My local distributors were out of items they’d normally have [in their Chicago-area warehouses].”

Historically, the economic situation has required adjustments to paper manufacturing inventories -- and COVID definitely is one of those times.

The biggest demand-supply disruption was the making of less paper due to business slowdowns in North America and around the world. Just how slow did it get for printers?

“SG360º’s business dropped off around 40% over the course of last year,” Smith said. "[At the mills,] manufacturing runs were pushed out from three weeks to four and five weeks. Some mills converted their paper machines to craft; others shutdown completely. There was a lot less supply [available].”

As inventory levels reduced, lead times stretched. Late last year and into Q1 2021, “once a contract was secured, it was critical to get the paper order in right away,” Smith said.

However, business at SG360º and other print firms has picked up.

“We are getting back to comfortable levels,” Smith said.

Viruses or not, international politics and policies always play a role when it comes to paper prices.

“Tax changes and tariffs can price out governments,” Dahms said. “That happened with [paper from] China a few years ago.”

Natural disasters and so-called “acts of God” also can wreak havoc on a printer’s best-laid plans.

“An envelope supplier told us about a glue shortage in February caused by a petroleum fire in Texas last December,” he said. “Sometimes, it’s a trickle-down effect.”

Freight woes, too

The domestic freight and trucking shortages posed by COVID is “another whole mess that was out of our control,” said a frustrated Smith. SG360º had paper orders canceled, which left the printer scrambling for replacements. In some cases, that “could double the cost of a project."

Dahms said that MidAmerican was “waiting longer to get paper because there just weren’t enough drivers.” Earlier this year, “we saw two-week delays on shipments [coming] from the East and West Coasts." Despite the logistical challenges, press dates did not change, so printers tweaked and adjusted production schedules as best they could.

Internationally, some one million tons of paper imports into North America annually. Many paper importers were effected negatively by COVID-19 outbreaks in shipping ports, especially in and around China and the Asian continent.

Vessels couldn’t be unloaded in a timely fashion for a while, said Pfister of Veritiv, which sources paper imports primarily from Europe. In addition, a container crisis was driven by changes in consumer buying during the pandemic.

“There was high demand for goods like bicycles and ovens, which people were buying more of [during lockdowns],” he said, leaving fewer shipping containers for items such as paper.

From end-users to mills, however, “people have been fairly understanding about the situation,” said Smith. “All partners involved work closely together and are in constant communication regarding product due dates.”

The bottom line, is that jobs are getting done on time.

“We haven’t been stonewalled by COVID,”  Dahms said.   .

Strong Demand for Ecologically Sustainable Options

As alternative fibers continue to replace plastic substrates in the paper and packaging segments, Monadnock Paper Mills has seen demand grow for its technical/specialty products. The New Hampshire-based company has been manufacturing paper for some 80 years, so Monadnock understands a thing or two about print-receptive coatings.

“Our specialty papers are disruptive innovations,” said Julie Brannen, Monadnock’s director of sustainable solutions. “We have gift cards that act and look like plastic but are 100% paper and recyclable."

In the “box world,” much of the packaging changes are driven by Fortune 100 and 500 brands. Monadnock features high-performance board available with or without coatings. For point-of-purchase (POP) signs, the specialty mill offers a Styrene replacement that can be washed and sanitized.

“It’s not a film. These are coated substrates with durable, base paper stocks,” Brannen said.

It also has a 15-point signage product for menus, used by at least one national restaurant chain. Durability varies, depending on need, from one month to 90 days up to 36 months.

“The longer-lasting products take longer to disintegrate,” she said.

Prices are competitive, too, “similar to synthetics,” Brannen said. “’Recycled’ doesn’t necessarily mean more expensive. There are all types of alternative fibers – from bamboo to hemp and straw. Raw material [pulp] is more available now because demand is up.”

Synthetic substrates often require extra processing steps, so “total cost of ownership should be considered” – not simply bare-bones pricing. “When the price of petroleum goes up,” she warns, “so does the cost of [most] synthetic media.”

The mill’s customers have seen a dramatic uptick in direct mail during the pandemic, which has been ideal timing for its 100% post-consumer recycled text and cover sheets. Some 18 months in development at Monadnock, Astrolite is a brilliant white, uncoated paper with superior formation and surface uniformity for excellent printability, the manufacturer says. Offered in smooth, a toothy vellum and a luxuriously tactile ultra-smooth silk finish paper, it has high opacity to minimize show-through, and dimensional stability to assure consistent registration and on-press performance. It is made in writing, text and cover weights up to 200 lb. (double-thick). Its coated counterpart is called Astrolite Velvet. 

“Printers no longer need to sacrifice performance for sustainability,” said Brannen, who has been selling “green” solutions for public and private mills since the late 1990s.

Monadnock has added numerous, new regional and national distributors in North America over the past few years, including five in the past year: Anchor Paper Co. in Minnesota; Case Paper Co. in Florida; Clampitt Paper in Texas; Digital Color Ink, LLC in the Mid-Atlantic U.S.; and Spicers Paper in Canada. There also is Lindenmeyr and Veritiv in New England.

“These partners see the need [for these products] in their markets.”