With three quarters of 2020 firmly in the rearview mirror, Quantum pushes forward.  As the pandemic continues, so does our industry.  This year has not been easy and with 2021 and a new wave of COVID upon us, we are all anxious to see what January brings.  In the 3rd Quarter, I analyzed the state of Inventories, transportation, paper, and sustainability.  With that in mind, I’ve published my 4th Quarter outlook on paper trends.

INVENTORIES AND MILL MANUFACTURING CHANGES – A RECIEPIE FOR SUPPLY CHAIN STRESS:  Begin with idled mills cutting back on both hours and staff along with falling inventories.1   Add in reductions in capacity as the move toward brown paper continues.2 Finally, you need only add a pinch of time-sensitive healthcare direct mail and election work and poof- Freshly baked chaos!

OUR ANALYSIS:  We are seeing longer lead times from the mills in both coated and uncoated paper stock.  In addition, we are seeing a willingness on the part of the mill to steer buyers toward inventory they have stocked rather than creating new runs.  Delivery dates are moving out, while Sappi and Verso have already announced an increase on the web side of the business.  Conditions are ripe for a possible freesheet increase in Q1.  To minimize these risks, we’ve been talking to our merchant partners and are keeping an eye on a fluid inventory and mill manufacturing situation.

TRANSPORTATION CONCERNS:  Along with some uncertainty in the paper and pulp markets, the trucking industry continues to struggle with a shortage of skilled labor.3   The transportation industry is already stressed by lower-than-expected employment levels – another reminder of the COVID effect has delivered to the industry.

OUR ANALYSIS:  We employ a three-pronged strategy internally and externally.  Let’s be aware, let’s be flexible, and let’s be overcommunicating.  This approach allows us to plan with greater accuracy and communicate clear expectations to our clients and partners.

PAPER vs. COVID:  As we continue to meet the challenges the pandemic presents, we are impressed with how the industry has responded.  Times like this can inspire innovation.  Antimicrobial stocks treated with silver solutions and silver ion coatings have made a splash in the marketplace.  Companies like Biomaster have partnered with fellow industry innovators to enable print to retain its tactile advantage.4

OUR ANALYSIS:  We like to think our struggles present our best opportunities.  We are glad to see the industry stepping up with options like the ones mentioned above.  At the same time, make sure you are educated by your supplier partners.  Marketing something like paper innovations can be tricky.  Claims that can be made for safety and certification are highly regulated by both the EPA and FDA.  Rest assured, we have this information at hand and ready for our customers –   Make sure your supplier does as well.

SUSTAINABILITY:  Alongside our Fourth Quarter Analysis, we are proud to present a snapshot of how much recycled content we processed though our plant for one of our larger automation projects through Q3.  I think you will be surprised to find out how many miles, kilowatts, and gallons were saved.  We think measuring these types of metrics are important.  On our upcoming to do list is a sustainability dashboard for the company.  We want to share our efforts with our clients industry peers and partners.  We cherish the opportunity to be good stewards, and we continue to see the market demand trend upward for sustainable solutions.

OUR OUTLOOK FOR FOURTH QUARTER 2020 IS POSITIVE WITH CHALLENGES:  We expect the paper market will get tight and there will be supply fluctuations along with possible volatility with price.  Logistics will also be something we’re keeping an eye on.  We will continue to respond to the shifting demands of our clients by keeping ahead of new offerings and technologies. Sound sustainability practices will continue to be at the forefront of our thinking.

About the author:  Paul Fillmore is Supply Chain Manager at Quantum Group and has over 20 years of printing industry experience. Paul’s specialization is in sheetfed printing and he has master level experience in litho and digital print production, estimating, planning, purchasing, and process engineering.

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