HIGHLIGHTS
- Some retailers are limiting the amount of toilet paper and other paper products customers can buy as suppliers struggle to overcome logistical barriers to exporting raw materials.
- The restrictions were introduced due to the bottlenecks in the supply chain of pulp, the raw material used in toilet paper and other goods.
FULL ARTICLE
Risk of shortage of paper products due to high demand
While suppliers face logistics challenges such as congestion at ports, container shortages, freight rates, etc., retailers like Costco and Sam’s Club are having to find ways to keep customers out hoarding goods and creating another shortage due to increased demand.
Ronalds Gonzalez, co-director of the Tissue Innovation Lab at North Carolina State University, said: “Stores like Costco are proactive in regulating merchandise, paper products won’t cause shortages as long as shoppers don’t buy more than they need.”
The tissue supply chain has historically been stable and predictable, said Gonzalez. But wild swings in demand have now left retailers and producers scrambling to keep up. Toilet paper makers like Procter & Gamble and Georgia Pacific had to increase capacity and expand production following a wave of panic buying at the start of the pandemic.
Big challenge for manufacturers
But slowed exports of raw material like wood pulp presents a challenge for companies looking to ramp up supply. Suzano said wood pulp shipments have been delayed and that export volumes were “negatively impacted” by port congestion and higher demand for break bulk vessels.
Leonardo Grimaldi, Suzano pulp commercial executive officer, said export delays are beginning to present challenges to producers ahead of peak season. Customers expecting a demand recovery will want to have raw materials positioned properly so “they can speed up their machines and their production,” he said.
According to the Producer Price Index of the Bureau of Labor Statistics, when the demand increased in August, the price of pulp increased by more than 50% over the same period last year. Costco is facing an escalation in the prices of many items, specifically paper and pulp that could increase by 4% to 8%. Not only that, but Costco is also facing shortages of various products and delivery delays ranging from 2 weeks to 3 weeks.
Though it remains unclear whether the demand increase will lead to another stockpiling frenzy, RISI Tissue Principal Esko Uutela said he doesn’t expect another wave of panic buying, nor does he predict purchase limits to be revived in stores on a large scale basis.
“Activity is picking up again as people are restocking again, but this may just be temporary,” said Uutela. “I don’t think these problems are so much related to the increasing number of new COVID cases and panic buying, instead it has to do with logistics issues.”
Hong Dao
FURTHER READING:
UK: Shortage of Christmas goods due to supply chain congestion
