September, 2021

How the container and paper crisis impacts the global supply chain of books.

BlueTree Group is constantly monitoring the global trends of the Book Supply Chain, including possible delays in the supply of raw materials and the disruptions that have occurred as a result of the Covid 19 pandemic. Schools worldwide are reopening and children are increasingly going back into the classrooms. Unfortunately, although children have gone back to school, there will be no books in some of these schools as a result of factors explicitly elaborated below including lack of paper among others. 

Before getting a finished book in your hands and reading its pages, the book has gone through an extensive supply chain. Raw materials including paper and ink have been collected and shipped from all over the world, whereas finished books have been printed and distributed internationally and locally.  

Alarmingly, there are major issues in the global supply chain of books. The situation has already forced many traders in the book supply chain to increase their costs. For instance, the cost of paper has drastically gone up, meaning that producing a book will be more expensive. On top of this, there is a global container crisis, and shipping costs have skyrocketed as the Covid 19 pandemic disorganized global trade. These issues will impact the prices of books and therefore influence international reading projects. In this blog, we want to raise awareness of the crisis currently hitting the global supply chain of books, and explore the factors that have caused these problems.   

The container crisis  

Presently, the shipping industry has been plagued by disruptions leading to delays in global supply chains. Moreover, shipping containers are scarce, shipping costs are at an all-time high and this has resulted in prolonged delays.  According to the International Chamber of Shipping, 11 billion tons of goods are transported by ship each year. Millions of containers are needed to facilitate the movement of these goods. However, there has been a shortage of shipping containers and the big question is, “where have these containers gone?”  

The current logistics challenges have been aggravated due to several factors and not just one particular problem. The covid crisis and the uneven global economic recovery have immensely contributed to this disruption. The lockdown in China starting in February 2020 and later, the lockdowns in other countries had a huge impact on international trade, halting economic movement and production. Many factories closed down temporarily as a mitigation measure to stop the spread of the virus. Shipping companies began reducing the number of cargo ships that were being sent out, causing large numbers of containers to be stopped at ports. On top of this, there was a halt in the production of new containers. In normal circumstances, a container carrying various goods will be sent from Asia to America or Europe where it is offloaded. A seller in America/Europe will also sell his/her goods back to Asia using the same container. Same containers are moved back and forth. However, right now, the containers are being stored in Europe and American ports among others. Other factors causing the shortage include lack of enough manpower at various ports slowing down cargo handling speeds and prioritization of long-haul shipments. Shipping clients are giving preference to long-haul shipments so that they can secure more profit. Container Shortage Explained 2021-BE FORWARD Official  

China coped with the virus faster than anyone else and therefore, China’s economy bounced back quicker than America, Europe and other continents. While China resumed exporting products, other nations were still dealing with lockdowns and restrictions. Consequently, the containers that were still in Asia headed to Europe or North America, but no containers came back quick enough (CNBC.com, 2021). And when containers are moving between ports, they have to deal with massive delays. In Los Angeles, it currently takes up to 12 days before a ship can drop anchor and unload its containers (Financial Times, 2021)  

Disruptions in Chinese ports have negatively impacted traders in most developing countries with consumers bearing the effects of costlier goods. For instance, according to the Kenya Business Daily newspaper, importers in Kenya were slapped with a 20% rise in Freight charges following a shortage of shipping containers in China. The average shipment charges on a 40-foot container from China, for example, breached the Sh646,000-mark in April, up from about Sh430,800 the previous month as traders scrambled for the few available containers. That pushed up freight charges by 95 percent between December and April alone (businessdailyafrica.com, 2021)In other parts of the world, container prices have also been disrupted. Along the route from Shanghai to Rotterdam, the prices to rent a 40-foot container soared 685%, to $13,698 in august 2021(CNN.com, 2021).  

The container crisis has affected all companies that need to ship goods and the book industry has not been spared. According to a printer based in Kenya, previously, it took them less than a month to procure raw materials. However, at the moment, raw materials are delaying by up to 3 months and this is slowing down their delivery timelines. Additionally, he mentions that the raw materials are up by over 35%. Generally, when a printer  orders paper, he will have to wait for several  weeks for a container to be shipped and may not arrive on time.,  Ultimately, all this leads to slow progress in production leading to a delay in book supply by up to 3 or 4 months. This means that children will not get the books on time which will affect their learning. To make matters worse, there is a paper crisis hitting the graphic industry hard.  

The paper crisis  

Reading a book is invariably a great pleasure and they are made of paper with printed text and images.  To attain the finished product, the book undergoes some technological intricacies during production. Raw materials including paper, ink among others are needed. Paper is the main raw material used in the production of books and accounts for 50-70% of the production.  

The graphic industry is currently in a paper crisis. The paper market for graphic paper, for printing books, has to compete with the market for cardboard and packaging materials. With the closure of many physical shops throughout 2020 and part of 2021, consumers have turned to online shopping. The e-commerce market is booming, and so is the demand for cardboard boxes for shipping goods. As the demand for cartons has increased, some paper mills have shifted entirely from production for the graphic industry to the production of cartons and packaging. Making graphic paper even more scarce. Because of the reduced paper capacity at the paper mills, the price of paper has gone up. The scarcity of paper has led to delays in ordering. If a local printer in South Africa wants to order paper, they have to wait for up to 3 or 4 months, whereas previously they would receive paper after a few weeks on ordering.  In Uganda, one of the printers used to receive paper within 4 weeks, but now, they are witnessing delays of up to 2 months. 

On top of this, the prices of raw materials have gone up. Prices of pulp, the raw material for paper, has shot up 3 to 40 percent, compared to this time last year (Staples.com, 2021). At the beginning of the lockdown, companies were uncertain of what the future would hold up, as a consequence they first sold their stock, before continuing to produce. As the economy did not collapse and there was suddenly extensive demand, factories were now producing to recreate stock and to serve the market at the same time. This overheating of production demand and the container crisis previously addressed has increased the price of raw materials and increased the scarcity of these products.   

How BlueTree Group monitors the global book supply chain

Almost everyone is talking about a global economic recovery. However, the hard truth is that the economy is still far from what it was before the pandemic since the current crisis is far from over. The market situation in global trade is only expected to ease in the first quarter of 2022, at the earliest (CNN.com, 2021), it is therefore highly important to keep track of the situation. At BlueTree Group, we closely monitor all the developments in the global supply chain of books. Daily, we are keeping track of the prices of shipping containers and paper, so that we can give our partners and suppliers accurate information and advice. These issues in the global book supply chain are already having an impact on current projects and if the situation persists, future reading projects will not be an exception. The situation is so severe that we have hitherto encountered printers that cannot bid in an RFQ because they are not able to buy paper. Right now, there are no clear roadmaps on tackling this crisisbut to cope with this predicament, we, therefore, encourage our partners and suppliers to purchase and plan well ahead. For example, book procurement can be done 6 months in advance as well as printers ordering paper well in advance and ensuring they have sufficient stocks in storage.  

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