The “perfect storm” hitting paper supply: Northwood

Mill closures, supply and demand imbalances, COVID-induced international freight issues, the impact of Russia’s invasion of Ukraine on softwood supply, extended UPM industrial action and global volume shortages – plus a refusal of many shipping lines to dock in New Zealand have created a “perfect storm” for paper supply, says The Real Media Collective CEO Kellie Northwood.

The printing industry is reeling after Ovato announced it would cease heatset printing in New Zealand effectively immediately in the face of rising paper prices and an inability to source paper over the short and medium term.

As Ovato New Zealand’s managing director Paul Gardiner put it: “We simply cannot run a sustainable heatset business without paper.”

The decision leaves 100 employees out of a job and leaves print rival, Webstar, as the only heatset producer in New Zealand.

The Real Media Collective includes Ovato among its membership and Northwood said the thoughts of the Collective were with Ovato NZ and the entire industry in New Zealand.

“We send our absolute thoughts to Ovato NZ, a very difficult day for all. TRMC has and will continue to provide support during this phase not only for Ovato NZ, but for the wider New Zealand membership and industry,” Northwood said.

She said the decision by Ovato to close its heatset presses and letterbox delivery service in New Zealand is a casualty of the “perfect storm” that is currently hitting global paper supply, particularly for catalogue grade papers.

“Paper supply into New Zealand is at critical levels with the impact of lost local manufacture upon the closure of the Norske Skog paper mill last year and shifting production to the Tasmanian Boyer mill in Australia,” Northwood said.

“It is my understanding, much of the volume consideration was based on newspaper and catalogue decline which has not occurred – readership and volumes have bounced back from the pandemic and this, coupled with the supply issues from Europe, is creating a significant imbalance to the supply/demand ration across catalogue paper grades.

“International freight issues due to the COVID pandemic, the Ukraine/Russia War impacting softwood supply, extended UPM industrial dispute, international port entry refusals and border matters with overall global volume shortages across manufacture, are all contributing to a perfect storm with disastrous impact for our newspaper and catalogue sectors.”

Delivery lead times have also blown out dramatically for Australia and New Zealand along with hugely inflated freight costs.

Northwood said TRMC is continuing to call on the Australian and New Zealand governments to provide a freight subsidisation to assist companies that are forced to import materials.

“Order to delivery timeframes into Australia and New Zealand currently carry lead-times of 6-8 months and 9-11 months respectively, with many shipping lines refusing to deliver to New Zealand ports and many deliveries facing unscheduled holdings at Singapore where containers are simply unloaded and held due to unforeseen or undisclosed reasons,” she said.

“For all of these impacts we are presenting to both Australian and New Zealand governments the need for additional support whether with freight subsidisation across imports or support to rebuild local production in the region.”

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