China is not always the bad guy! IN this instance they were the first ‘out’ of Covid having been first in, their domestic market is booming, as a consequence their normal export of packaging board to Europe has stopped, estimated to be around 500,000 tonnes per annum. This is to maintain supply to their domestic market, they are the biggest manufacturer in the world but the also the largest consumer.
Covid is blamed for many things, some of which are real some not so much. There has been a very real impact of paper and board manufacturing, mills closed for certain periods of lockdown on safety grounds, staffing grounds and this has left a window where not enough board was produced just at a time when suddenly everything was bought, sold and delivered online – using more packaging than ever. They are playing catch up but it will not be an overnight fix.
Distribution Network, we have all heard about the lack of lorry drivers in the UK which is in fact an Europe wide problem recognised back in 2018, but were you aware of the shipping container shortages? In fact there are container ship shortages too! This relates to covid, when Chinese output slowed, shipping companies sent older ships to scrap and ordered new ready for when China re-opened (as such) this was far quicker than anticipated leaving a shortage. The average 40ft shipping container as an example from China to the UK has gone from £2000 to £16000 and climbing – highlighting the shortage and increasing the cost of many day ti day items at the same time.
Solutions?
As with most issues like this there isn’t one quick fix that will overcome the problem in the longer term, but there is a lot of work underway to alleviate the pressure on supply, primarily there are paper mills being converted to card/board production; this isn’t a quick process but is already well underway.
China will continue to boom, but should the time come where they are keen to export and entice western buyers back to production in China there may be a change of opinion, certainly in the UK buyers have seen how ‘on demand’ UK printers can be, with reduced turnaround times and a more attentive service to clients needs. This is something the industry has been crying out for (in my opinion) to lose the arrogance and deliver real customer support. from our experience in the last 18 months clients like it and tell us how much easier it is to work with domestic printers of the new generation.
How can you minimise the impact on your supply chain?
Time!
Here are some easy fixes that will help you in the next 3-6 months:
- Notice – Talk with your packaging printer about anticipated requirements and dates, a proactive supplier will start to source board in anticipation
- Flexibility – Consider alternative stocks, perhaps GC1 isn’t available but GC2 can be
- Short term pain- There is the possibility the correct material is available but not in the sheets size required to get best value, be prepared to pay a little more in the short term to maintain continuity of supply but printing less boxes per sheet of card. Ask you supplier what other sizes are available.
- Reduce stock levels – consider the possibility of running at lower stock levels to stretch it out and allow you time to buy better or source material
If you are having problems with supply, we may be able to help; as a smaller packaging company specialising in runs of 500 to 50,000 we can often be more flexible, if you are having supply issues – please don’t hesitate to get in touch, if we can help, we will.