We’re Living in an Era of Unprecedented Product Shortages.
In the earliest days of the pandemic—before it was even clear to us just how awful things were going to get, and how much compassion, forbearance, ingenuity, and plain old heroism was going to be required from so many to get us through it—industries around the world were thinking about how to respond to this massive shock to global supply chains, and how to continue to get their products to their customers.
This wasn’t just a matter of making a buck, as we learned all too well. With whole sectors of the economy in turmoil and huge metropolitan areas under lockdown, it became a critical question of public health and good governance to get PPE, and later medicine and vaccines, to vulnerable populations.
But the disruption was nearly universal. In the teeth of the pandemic, the consulting firm Accenture reported that 94% of Fortune 1000 companies were seeing supply chain issues due to COVID-19. That’s because fighting the disease touched economic activity at so many different points. There were huge and sudden demand drops in areas like tourism and travel; huge and sudden demand spikes in things like sanitary products; massive hits to labor supply and productivity in a number of manufacturing areas due to social distancing requirements; transportation and logistics nightmares caused by travel restrictions; on and on.
At the very beginning of the pandemic, we saw a little of this in one part of the pulp and paper industry with the short-lived toilet paper shortage—which was driven not so much by hoarding as the fact that so much TP was manufactured for use in commercial environments, and companies had to quickly pivot to more manufacturing for private consumption.
But while that shortage really only lasted a matter of weeks, other disruptions have lingered far longer, or only came to a head more recently, the result of complex cascades, dominos that fell over the course of many months before the full consequences became apparent to consumers.
To give just a few examples: KPMG predicts the global automotive market could lose $100 billion in 2021 due to their inability to manufacture enough cars to meet demand? A shortage in turn caused by a global shortage in semiconductors—an industry largely centered in East Asia and hugely impacted by the pandemic.
The New York Times reports that this summer will see a chlorine shortage, due to a fire at a major chemical plant and a pandemic driven boom in backyard pool construction.
But you won’t be surprised to see me highlight two parts of the global supply chain that managed to escape this fate and meet full demand in the last year and a half: food and ecommerce, both industries carried—literally and figuratively—by paper-based packaging.
That’s not to say box manufacturers haven’t been stretched thin recently, but even with demand surges caused by nothing short of a complete upending of the way people live their lives, corrugated and paperboard proved themselves up to the task of delivering all those other things that largely homebound Americans were relying on.
This is really remarkable, and a bright spot in a dark time, something we should be proud of and something that deserves a little reflection. What is it about our products that helped us excel under stress?
There are analysts and business decisionmakers in our industry much more qualified to answer this question than I am, but let me offer a few suggestions to start the conversation:
First, our industry is truly global, but the markets for our raw materials—trees and recovered fiber—are intensely local. I can’t tell you how many virgin and recycled mills I’ve visited where I heard some version of: ‘Most of our fiber comes from family-owned forests within about a hundred miles of here.’ Some industries see that kind of hyper-local supply chain as a limitation. For us it proved a great strength.
Production and distribution is local, too. When your company needs boxes to ship a million pallets of widgets, chances are the glossy, colorfully branded boxes you’re using will have been manufactured close by to your factory or distribution center. The same is even more true of food production and distribution, where our companies work hand in glove with farmers and grocers to create robust regional supply chains.
Secondly, our industry is circular. Other industries rely on nonrenewable or rare raw materials, or highly complex products with many layers of value-add manufacturing that sometimes touch a half dozen facilities on three continents before reaching their end users. Not us. We work with a raw material that is renewable and actively being renewed, that is recoverable and has unmatched recovery rates. That is natural and relies on a technology—pulping—that is both time-tested and cutting edge.
As long as there are trees and folks willing to take care of them, there will be boxes. And as long as there are people who need to send vitally important things from A to B, there will be no shortage of good uses for them.