Scarce raw material availability in the paper industry causes prices to rise

The covid pandemic led to interruptions in the production of raw materials worldwide, as well as in international shipping. After only six months, world trade had recovered, resulting in a shortage of empty containers in container logistics and too little transport capacity in international shipping. The situation came to a head with the accident of the container ship "Ever Given" at the end of March. The ship had paralysed the Suez Canal for days, causing more than 400 ships to jam on both sides of the waterway.

The consequences of these developments were worldwide shifts in the supply and availability of raw materials. All of this has led to massive cost increases in the paper industry, which has also affected Koehler Paper.

Due to the events of the past few months, the task of the purchasing department has come to the fore, which is particularly challenged now in this crisis to ensure the security of production supplies. Koehler Paper, like other companies in the paper industry, is confronted with sometimes significantly extended delivery times worldwide. Klaus Krieg, Head of Supply Chain Management at Koehler Paper, notes: "Many of our suppliers are already pulling the force majeure clause in their contracts with us due to the critical supply situation of raw and auxiliary materials." In addition, there is a worldwide shortage of containers and shipping space, which further delays delivery times by four to six weeks.

Koehler Paper acts proactively with long-term strategy to secure raw materials
Koehler Paper implemented long-term strategies at an early stage to ensure raw material availability. Risk analyses were prepared for all important raw materials and a supplier strategy derived from them. Inventory management of critical raw materials is constantly adjusted in view of the situation. "Just in time" delivery used to be the norm, but today people also talk about "just in case" models and build up stocks of critical raw materials. Direct, long-standing and close contacts with suppliers worldwide have also helped Koehler Paper in the tense raw material situation. In addition, annual supply contracts have helped to secure the supply of raw materials.

But it is not only the shortage of raw materials that is causing turbulence in the global paper industry. There are also logistical bottlenecks not only on the procurement side, but also in deliveries to customers. Koehler Paper therefore relies on a diversified supply chain to counter the problem. A mix of rail and ship via more ports is the recipe for success for deliveries from Asia. Especially shipping space for sea containers in international shipping is a scarce commodity. This is reserved in advance for customer deliveries on a long-term basis. Koehler Paper takes over the coordination and monitoring of the transports to the port of arrival to ensure that the agreed delivery dates are met.

The massive increases in raw material and logistics prices have already had to be passed on to customers in the form of price increases in all divisions. Further price increases will be unavoidable. However, production and deliveries to customers have been ensured so far, even if delays cannot be completely avoided, especially overseas.