Sustainable Paper Supply and Supply Problems During the Pandemic Period

According to TUIK data, the highest price increase in 2021 was realized in writing and drawing papers with a rate of 168%. This rate goes up to 290% in cardboard and corrugated cardboard papers.

As a cardboard packaging manufacturer, all of the cellulose-based coated and bristol cardboards with high surface quality, as well as half of the chrome cardboard and corrugated cardboard papers produced from scrap paper, are imported. Therefore, since we are an importer country in paper products, exchange rate increases are directly reflected in prices.

The dollar, which was 7.38 TL at the beginning of 2021, closed the year at 13.37 TL. This shows that 80% of the increase is due to the exchange rate.

So why did the paper prices rise so much while the exchange rate increased by 80%?

First, in early 2020, education was suspended due to the pandemic, shutdowns occurred in many countries, and production slowed. While this situation increased the demand for cleaning papers and takeaway, e-commerce boxes, it decreased the demand for other paper types (printing house, notebook, book, etc.) by 20%.

Factories working with lean production - just in time concepts, which they have been aiming for since the 1970s, did not stock up and slowed down their production as they could not foresee the future in this period. However, when the wheels of production started to turn with the effect of the vaccine, the factories could not respond to the demand and orders began to accumulate. The excess demand and lack of supply were reflected in the prices.

The second reason is Logistics problems.

The deterioration of the supply-demand balance in global trade brought along logistics problems in maritime transportation.

Global trade due to the epidemic; While it was cut like a knife at first, it increased rapidly after China recovered early in the epidemic and stepped on the gas in production.

In addition, due to the effect of the ongoing pandemic in other countries, the ships could not return in a short time because they could not unload their cargo. These waits had a knock-on effect on travel times, resulting in delays of up to 2 weeks in the travel time of a container ship. Delays gave rise to the empty container crisis and historic increases in freight prices took place. Container freight between Europe and Asia increased by more than 1000 percent in 2021 and exceeded 18 thousand dollars. This situation made it difficult to import paper from China and filled the order list of other manufacturers who were already unable to meet the demand.

The third reason is the increase in production costs.

There were also rapid supply and demand changes in cellulose, which is used in the production of paper, which is of vital importance for box and packaging products. Cellulose, which was priced at the lowest levels at the beginning of 2020, saw its highest levels in the first months of 2021.

On the other hand, energy prices, one of the most important costs of factories, rose.

In China, which provides 60% of its electricity production from coal, energy costs increased with the increase in prices by up to 4 times, and there were stops in the factories where electricity cuts were applied.

Insufficient natural gas supply in Europe has increased energy prices significantly.

It has been announced that electricity cuts will be applied due to the inadequacy of natural gas supply in our country these days. The domestic Karton producer Kartonsan's statement that production was temporarily suspended as of 21.01.2022, until the natural gas supply restriction is lifted, shows that we will continue to be one of the most affected sectors.

As a result, in 2022, which we started with the hope of normalization, the rapid increase in the cases of the omicron variant, the fact that the causes that negatively affected the paper industry have not disappeared, and the new problems that have arisen show us that a return to the pre-pandemic order will not be soon.

In fact, the discussion of returning to local production instead of global production with the emerging problems and the suspension of lean production concepts indicate that we need to determine new measures and new strategies in the "new normal".

As Akın Ofset, with the measures we take in order to continue to provide the best service to our customers without interruption,

•   - We have increased the stock efficiency by switching to the use of coils instead of sheet size,
•   - We strengthened our stock by removing the intermediate weights except the most used weights.
•   - Thanks to our production data, we were able to predetermine many needs and supply our decreasing varieties 2 months in advance.
•   - We worked to eliminate supply risks by making agreements with our customers for repetitive or pre-planned work.
•   - We increased our product range with our design team and expanded our product range of e-commerce boxes and specially designed printed boxes, which are especially important in domestic demand.

Our goal is to closely follow the developments at home and abroad in this period, and to be among the companies that plan the process well, together with our customers, without deviating from our sustainable production targets.