As we look back on 2020, it’s impossible to overstate the impact of the international pandemic on countless worldwide industries. We all watched as restaurants shut down and gyms closed in cities across the globe.Similarly, we all experienced the mad dash for paper towels, toilet paper, and other home essentials early on when shutdowns were first looming. The industries supplying these goods have had a very busy year navigating increased demand and reduced work capabilities at the same time. How has the paper industry felt the impact of COVID-19? Has it bounced back? What other industries have been affected?
Let’s talk about the effects that we have seen and the immediate forecast we see for the paper industry.
Paper Industry Considered Essential by Many Governments Nationwide
As the world turned to lockdowns to help stop the spread of the coronavirus, the paper industry was one of those considered essential by many governments. This was largely due to the increased demand for hygienic products—especially as many consumers prepared for quarantine by stockpiling various paper goods.
This spike in demand allowed some companies and factories to keep their doors open— though, not without significant safeguards, controls, and restrictions. As some facets of the industry were able to keep working, to some degree the industry avoided what could have been a much larger backup in the supply chain.
Global Logistics of the Paper Industry Experiencing a Constant Flux
The paper industry is a global one. There are factories in many countries, and much of the business of paper depends on frequent travel and communication between different continents. The staggered effect of COVID-19 as it swept across the globe—hitting some cities harder in the spring and others more viciously in the summer—has reduced the industry’s capacity to communicate effectively. Unfortunately, during the winter the situation will stay tight.
Another consequence of COVID-19, the widespread travel bans and import/export restrictions, have impacted the way that paper companies have been able to manage their clients. Many companies have had to revert to remote meetings, which some consider to be less than ideal.
Fluctuating Demand Meets Varying Supply
Has the price of paper changed as a result of the fluctuating market? Does it cost more to make paper, and, as a result, are paper companies charging more?
Currently, because the demand for many paper products is historically low, the competition among paper goods manufacturers is fierce. Paper companies are playing a delicate game, vying against each other for the few consumers purchasing their wares. This means that prices are at an all-time low, but that’s hurting paper companies because the cost for their raw materials is, at the same time, rising.
Normally, the paper industry relies on a constant supply of recycled waste paper for its source materials. This year, the collection of those recyclables has largely ceased, driving up the cost for the raw material that does exist. Paper companies now are forced to pay sky-high prices for the material they need to make paper, but, due to low demand, aren’t able to raise the prices they charge their customers.
Unfortunately for some companies, their margins are becoming as thin as the paper they sell.
Paper Industry Sales Reduced Overall
The paper industry and other industries that paper largely supports are experiencing wildly diverse results. Textiles are down. Touring companies need fewer hygienic goods.
Even in those places where the pandemic has less substantial effects, most factories have had to close down for at least a couple of weeks.
However, because other paper products and markets (for example, the cardboard boxes necessary for online shopping or the packaging supporting hygienic products) have experienced a parallel all-time high in demand, the overall industry has managed to stay in balance.
Currently, the industry is struggling to reorient itself to meet updated demands while experiencing as little loss as possible in the process.
The Current Status of the Paper Industry
As we continue to weather the pandemic, many industries are finding ways to work through the upheaval of previously predictable markets. Little by little, consumption is back on the upswing. More buying is happening online.
The price of paper continues to fluctuate globally. The low supply of recycled raw material had increased the costs for paper companies to produce their wares and availability of the raw material continues to be unreliable.
Turn Over a New Leaf with Practical Packaging from Conitex Sonoco
If your company is seeking new ways to rebuild in the wake of COVID-19, it’s time to consider creative options for low-cost, low-impact packaging.
Conitex Sonoco is an invaluable resource for a wide variety of products supporting the paper industry in a smart, sustainable manner. Our offerings include paper tubes for textiles, corrugated pallets , and more. Contact our team for information about cost-effective, strategic packaging solutions to help your industry rebound from COVID-19.