Why is there a Paper Shortage?

History credits the invention of paper to Cai Lun, a Han dynasty court official, in the year 105. After watching how bees and wasps build their hives, he used plant fibers and rags to form the first sheets. Today, paper companies churn out over 300 million tons of paper annually. Yet, this is still not enough to prevent a paper shortage.

Why is there a paper shortage?

We all remember the notorious toilet paper shortage at the start of the pandemic. Pictures of empty shelves cycled the news as toilet paper companies worked hard to catch up to the demand. Fortunately, they succeeded, but this was just a drop in the barrel that has led us to the current paper shortage.

Paper is present in virtually everything we use. Cars come with manuals, food products have paper labels, and just about every company packages physical products in cardboard. Everybody needs it, we depend on it.

The toilet paper shortage was artificial in the sense that it was caused by a widespread panic before we understood the virus. People did not suddenly need to use significantly more toilet paper for their daily lives, and the people who stocked up early had no need to buy more as soon as they had an opportunity. 

The paper shortage we are facing now, however, is based on long-term growth in demand. Even with the combined resources of controlled forests and recycled boxes, we’re struggling to keep up. 

Unless the pulp supply can consistently meet the growing demand, we can expect to be stuck in a shortage. Pulp mills are large, complicated facilities, however. Building a new mill is no small feat, and requires finding the right people to keep things moving. 

How mills make pulp

The very first step in the paper-making process for a mill is, of course, acquiring the wood. To ensure they are as sustainable as possible, large mills use controlled forests. The paper and pulp industry plants 36% more trees each year than they cut down.

Additionally, the pulp and paper industry only uses about 10% of the trees cut down for wood-based industries. To bolster their supply at low costs, these companies sometimes also buy sawdust and other discarded tree material from sawmills. 

Once trucks haul the logs to the mill, machines remove the bark to be burned as fuel. Next, the rest of the wood makes its way down the line. Turning wood into pulp is a complicated process that utilizes multiple machines that cost millions of dollars.

The process basically sets out to separate lignin, the glue of the wood, from the rest of the pulp materials. To accomplish this feat, mills use a chemical called white liquor. You can think of white liquor as a soap that clears away the glue. The lignin discolors the chemicals, now black liquor, and the wood becomes soft and pulpy.

Next, the mill bleaches and packages the pulp in large blocks until it is time to ship them out.

Mills do not discard the black liquor, however. Using the Kraft Process, the mills send black liquor to a recovery boiler and turn it into green liquor. Next, they treat it with lime to remove the lignin completely and revert it back to white liquor to begin the process again.

While the process is sustainable, even the largest mills can only pump out so much pulp. Assuming there is no supply shortage for making pulp, the industry still needs to create more facilities to keep up with demand.

E-commerce

The market that resulted from the pandemic is a dream for e-commerce companies. As the market shifted, no company had as much success as Amazon.

This Digital Commerce report outlines Amazon’s rampant growth throughout the pandemic. Amazon managed to:

  • Increase revenue from $280.52 billion in 2019 to $386.06 in 2020
  • Post a revenue of $221.60 billion in the first half of 2021 compared to $164.36 billion in the same period of 2020

Despite Amazon Web Services accounting for more than half of Amazon’s revenue, the number of packages they deliver is still staggering. Modern Retail reported that Amazon delivered 4.2 billion parcel shipments in 2020 compared to the 10 million in 2014.

Much of this is due to their efforts in welcoming independent sellers to the platform. In their 2021 Small Business Empowerment Report, Amazon reported that over 2 million small and medium-sized businesses are using their platform to sell products. 

Essentially every single product from every online seller has one thing in common: a cardboard box to protect it in transit. The Atlanta Journal-Constitution reported that U.S. cardboard plants alone generated 407 billion square feet of cardboard in 2020. This was barely enough to meet the growing demand. 

It’s yet to be seen whether Amazon will keep this momentum, but the exponential growth of revenue is unlikely to suddenly end. While Amazon is the biggest online retailer, it isn’t the only company creating demand for cardboard. 

There are nearly 1.8 billion listings on eBay. Retail giants like Wal-Mart and Target have set up online shops in hopes of rivaling Amazon. And this isn’t even to consider some of the massive e-commerce sites outside the United States.

Supplies

All these companies and individuals are vying for the boxes they need to ship out orders. The 407 billion square feet of cardboard sounds like it should be way more than enough. This is, unfortunately, not the case.

In 2021, the United States cardboard box and container market was worth $74.3 billion with a growth of 7.8%. If this rate is consistent for 2022, the U.S. market will be worth over $80 billion. When you consider how cheap cardboard is, that extra $6 billion worth will translate to over 30 billion square feet based on current numbers.

Every single foot of cardboard is made of processed wood pulp. As such, the price of the wood pulp dictates the price of all paper and cardboard products. If demand continues to rise without an equivalent increase in supply, it’s very likely that prices will rise universally. 

To bolster the wood pulp supply, which has grown dramatically in price in 2021 compared to 2020, some manufacturers are putting additional efforts into recycling used cardboard. This uses 40% less energy than processing trees. That said, pulp mills generate some of their power by burning waste wood and directing the resulting high-pressure steam. 

Additionally, because the number of trees planted is based on the number cut down, greater recycling efforts can stagnate the growth of controlled forests. That being said, there’s currently no perfectly environmentally friendly way to manufacture many of the products we depend on.

It would take something revolutionary to change our dependence on paper more than computers, and it’s likely that such an innovation would take time to implement on a global scale. Until then, we are at the whims of the market.

How paper shortages affect healthcare providers

Electronic health records have significantly reduced the amount of paper that healthcare providers need to use, but they are not perfect. While the records can be kept digitally, not everybody is able to access the system they’re stored with.

In this case, healthcare providers are often forced to use other methods of releasing medical records. Traditional fax machines are a common option for those required to comply with HIPAA regulations. Unfortunately, these have their own issues, including but not limited to:

A goal many healthcare providers share is going paperless. People can more easily share, transport, and filter digital records when they store them responsibly. Back when doctors kept paper medical records in filing cabinets, retrieving the right records could be a nightmare if they were misplaced. 

Electronic health records save healthcare providers an unfathomable amount of paper. At ChartRequest, we want to help them save even more with our modern release of medical records solution.

Our platform integrates with your existing electronic health record system, allowing you to handle the entire release of information process digitally. Our streamlined, HIPAA-compliant platform makes releasing medical records quick, easy, and safe.

Create your account today, and protect yourself from the rising costs of paper waste.