UPM’s pulp sales and logistics face the Covid-19 storm in Europe

UPM Pulp, is a company that produces the most complete range of hard and soft wood pulp products in a sustainable way. Its directors Paolo Sergi, Stefan Achrén and Matti Tamminen, tell how the sales of paper products evolved and how the sales and supply chain teams adapted to the new workflow, ensuring delivery reliability.

The highest season for tissue paper consumption is usually from January to June due to the avalanche of flu and other viruses, while the summer is dominated by the HoReCa sector: hotels, restaurants and catering. However, when COVID-19 hit Europe in March 2020, it destabilized the usual market dynamics, says Paolo Sergi, director of sales for UPM Pulp Europe, Tissue and Hygiene.

“In Europe, we had three lockdowns, so all the ‘away from home’ channels, namely the HoReCa sector, were completely destroyed overnight. Tissue producers instantly faced pressure to deliver single-use products, such as hand and kitchen towels, because the public was being urged to wash their hands often and avoid hand dryers,” he explains.

As society started using face masks, the tissue segment shrunk and consumers began using washable cotton napkins or tea towels at home, leading to a drop in the napkin segment. The other challenge was the psychological effect seen in the early days of the pandemic that triggered panic buying across the continent.

“At the end of 2020, we saw a 4.7% increase in worldwide demand for tissue, but it was not totally real consumption since a lot of it is now stocked in homes. There was also ‘stocking’ by retailers in their warehouse hubs because they started to buy to reduce the risk of empty shelves in stores,” Sergi says.

With paper and cardboard, Stefan Achrén, sales director, UPM Pulp Europe, recalls that practically the same thing happened: “When Covid struck, a lot of schools and offices closed so the consumption level went down quite a lot. Office closures meant copy paper use decreased, magazines sales plummeted as all kiosks and newsagents closed and advertisements went down as well. The second quarter last year was a complete disaster. Globally, printing and writing paper demand went down by 16% in 2020 (vs 2019), while some coated paper grades went down as much as 25%.”

During the second and third quarters of 2020, the demand for paper fell significantly, and as a consequence, paper producers reacted by reducing inventories. This changed when vaccinations began, as it gave consumers hope and the demand for paper increased dramatically.

“Everybody started ordering a little bit more than they needed because they knew it was going to be more expensive next month. Demand for fine and magazine papers increased and has continued surprisingly strong,” says Achrén.

On the other hand, the pandemic led sales teams to work remotely without the ability to visit or meet customers face-to-face at events, which is why UPM Pulp made a significant effort with its virtual sales interactions to maintain communication with your customers.

“When it came down to virtual meetings, we realised that the number of participants needed to be low to get the best engagement. It was much easier to bring in exactly the right experts to the meeting from our side as there were no travel requirements. For example, if somebody showed an interest in sustainability, it was easy to include one of our experts in the discussion,” says Achrén.

To ensure that all volumes are moved from Uruguay or Finland to customers, UPM had a close relationship between the logistics team and customer service. “We are constantly making sure that we have the agreed volumes available for our customer deliveries,” says Matti Tamminen, director of UPM Pulp Logistics and Customer Service.

“Looking back, it was a challenge for our trucking operations when the EU established border controls, followed by the different quarantine rules for drivers. It created a lot of scheduling and driver availability-related challenges. The additional demand also tested our railway logistics,” shares Tamminen.

UPM Pulp’s shipping operations were well managed despite the company’s logistics spanning road and rail. “We don’t use maritime container transportation in the European marketplace; everything we do is based on dry bulk shipping. Second, we have a tailormade shipping solution based on the concept of a time charter vessel fleet, so we’re not easily exposed to market disruptions in our European logistics,” he explains.

Managers comment that the market is recovering, as the pandemic is under control throughout Europe and border crossing problems have been alleviating. “We are getting back to normal,” says Tamminen, adding that “general cargo activity has been returning to pre-pandemic levels and it is creating huge demand for trucking capacity.”