The Perfect Storm: The Supply Chain Crisis Hits Books
In a recent interview with BBC, I was asked by the host Sally Bundock “Is there a paper crisis in the offing?” In short, the answer is, yes, but paper is not the only challenge publishing faces due to the global supply chain crisis. Given the limited time I had to address the question in the interview, I wanted to leverage my monthly blog to elaborate on the answer.
In late 2020, IPA was seeing early warning signs that the global pandemic would have a significant effect on the publishing supply chain. As the post-pandemic economic recovery gains speed, we are now seeing evidence that the broader global supply chain crisis is amplifying the supply chain challenges that the publishing industry faced at the height of the global pandemic. How the new Omicron coronavirus variant might further confound things is also an emerging worrisome unknown.
Early Warning Signs
In consultations for IPA’s report From Response to Recovery, our members raised several red flags about ongoing supply chain challenges. In late 2020, IPA members reported printing delays because of paper and raw material shortages. They complained of book shipments facing disruption as transport companies navigated border closures and port congestion leading to uncertain inventory lead times. They also explained how printing and transport challenges had downstream ripple effects which ultimately led to stock shortages at bookstores and other retail channels.
In 2020, a key industry takeaway was that any weakness in the book supply chain affects its health as a whole. Our industry met these challenges, which we believed to be transitory, with some truly innovative technology-enabled routes to market. Now, disruptions from the global supply chain crisis are again affecting printing, paper, shipping, and logistics. It is looking increasingly likely that the global supply chain crisis will have longer-term impacts on the book supply chain — potentially well into 2023. This time around, the solution seems less apparent.
Global Publishing is in the Eye of the Perfect Storm
In February, I wrote about how I believed 2021 would be a year of rebound for global publishing marked by increased industry solidarity to rise to common challenges. To some extent this optimism proved true with initiatives like the International Sustainable Publishing and Industry Resilience (Inspire) Plan and Charter catalyzing much-needed cross ecosystem cooperation and dialogue. In 2021, Over 50 publishing ecosystem stakeholders signed on to the Inspire Charter to increase collaboration on industry recovery.
Many of the more developed publishing markets fully rebounded on the back of record high sales, and we’ve begun to focus industry conversations on collective action on common sustainability and resilience challenges due to Inspire. However, the global supply chain crisis is creating a perfect storm in the book supply chain which may threaten recovery while reinforcing the need to fast-track industry cooperation.
Raw materials for printing are facing global shortages. Book paper shortages, ultimately stemming from shortages in wood pulp used to make paper, are leading to surging prices that could last into 2023. In China, a significant global supplier of pulp, efforts to reduce pollution have limited the operations of pulp and paper mills and forced many to close. Other pre-pandemic structural shifts — like the backlash against plastic usage — have meant increased demand for paper alternatives. At the same time, with online ordering now booming, demand for cardboard boxes has pulp and paper mills shifting production to cartons and packaging rather than book-grade paper. Printing ink is also increasingly expensive as China’s environmental initiatives have also targeted printing ink raw material suppliers. These developments come at a time when the publishing industry is also coming to terms with the need to do more about climate change and its role in supporting sustainable development initiatives.
Global publishing also faces a printing challenge. Consolidation and industry dynamics, like high entry costs and intense competition for labor, in the printing industry have led to many countries facing domestic printing capacity challenges. While books are often printed in Asia to benefit from lower manufacturing costs, global shipping and logistics costs have also surged globally making this business model unworkable. Currently demand for printed books far exceeds global printing capacity — a situation which looks likely to persist given the uncertain and volatile economics of investing in the printing industry.
We’re also in the midst of a container and logistics conundrum. Shipping and distribution networks globally are congested resulting in cargo transport costs hitting an all-time high. This global supply chain disruption has several drivers including port congestion, shipping container shortages, and trucking and last mile delivery labor shortages. As a result, shipping and storage costs for all products, including books, have spiked, and supply chains face significant, unpredictable delays which affect stock planning and replenishment.
Impacts on Publishers, Readers, and Retailers
I think we will start to see the impacts of the global supply chain crisis in publishing more clearly by the end of the year. For publishers whose releases have already been printed or have had their printing runs and shipping scheduled for the holidays, the impact is expected to be minimal. However, some publishers which did not anticipate the current crisis have begun postponing release dates due to capacity issues and backlogs, and the lead time for reprints has increased significantly from weeks to months.
The surging costs of key inputs to the publishing industry will also increase operating costs in 2022 for publishers. It will become increasingly important for publishing ecosystem players to manage supply chain vulnerabilities to keep books in the hands of readers. There will be a big focus on publishers, big and small, on developing supply chain contingency and resilience planning capabilities to avoid title shortages and delays. At the same time, rising costs of printing, paper, ink, and labor may further accelerate industry digitization and automation trends making digital transformation more critical than ever to industry sustainability and resilience.
With the significant increase in the costs of manufacturing inputs, transport, and storage cascading through the book supply chain, prices are likely to go up for readers in 2022. How these increased book prices might affect demand for books remains unclear. In this environment, retailers could also face stock issues if they are unable to gauge demand for initial orders or a surprise best seller requires reprinting.
What IPA is Doing
It is now clearer than ever that solidarity is required to confront systemic supply chain challenges like the industry is facing now and to build resilience and sustainability for the future of global publishing. Over the last year, IPA’s Inspire initiative has sought to build publishing ecosystem solidarity based on the belief that the industry is stronger together. IPA’s Vice President Karine Pansa, who leads the Inclusive Publishing and Literacy Committee’s Sustainability Working Group, and Michiel Kolman, Chair of IPA’s Inclusive Publishing and Literacy Committee, are also working to address the resilience challenges facing the publishing supply chain.
Acting in isolation, there is not much that can be done to fix the current challenges by any sole stakeholder in the value chain — solidarity is the only way forward. To address the impacts of the global supply chain crisis on publishing, IPA is convening a symposium in February at which we will discuss joint solutions. Stay tuned for more information about the Inspire Symposium.