Another Finland strike is making headlines and giving the paper industry flashbacks to last year.

The Finland Transport Workers' Union, known as Auto-ja Kjetusala Työntekijäliitto (AKT), began striking on February 15, 2023.

The strike is between union and employer organizations over labor and wage disputes for stevedores, terminal workers, and other various transport professionals.

If this sounds familiar, that's because the AKT was on strike just last year. On January 24, 2022 the AKT started blocking UPM goods going in or out of Finnish ports in support of the Paperworkers' Union strike at several UPM mills.

The UPM Mill strikes lasted 112 days and affected the production of crucial paper supplies and materials. This contribution to the global paper shortage was so dire, European label organizations and printing associations had to step in.

Instead of striking to aid the mills, the current AKT strike is affecting major ports in Finland.

Until further notice, all vessel operations, gate moves, and the handling of containers within port terminals has been suspended.

A Finland newspaper stated that the strike "may cripple Finland's foreign trade."

But as dire as this sounds, we're not in the same position we were last year with weak paper supplies and high demand.

So the label industry is likely to see little repercussions because of the AKT strike.

Here's what we know about the strike so far:

Several industries are affected by the port strike, including:

• Trucking
• Terminal operations
• Tanker and oil products

The AKT had previously warned of an impending strike. When proposals were rejected on February 14, 2023, the strike went into place at 6am the following morning. A complete list of the locations of the companies affected by the strike can be viewed on the AKT official website.

Strikes can deal a huge financial blow to not only businesses, but a country's economy. The Finnish Port Operators Association is already reporting an impact of $300 million per day to Finland's foreign trade.

Then there's the impact on key materials. Countries that rely on exports and trade are unable to acquire what they need, resulting in a domino effect of shortages.

Concern about the port closures affecting companies like UPM and their ability to deliver pulp and paper supplies is definitely warranted. Especially considering the state of the paper market over the last few years.

With supply failing to match increased demand, worry about a repeat of the 2022 UPM strike makes sense.

About 90% of Finland's foreign trade moves through the nation's ports, creating a potentially perilous situation for exporting. 10 major ports are being affected, including several that are crucial for paper industry exports.

For example, Hamina is Finland's biggest export facility serving the forest industry, and Rauma is their largest exporter for paper (also close to UPM Rauma, which has a capacity of producing 665,000 tons of lightweight coated paper per year).

But even with all of this damning information, the dread of Finland's last strike doesn't loom overhead the same way.

So why isn't this strike setting the label industry up for a paper shortage horror movie sequel?

Three words: supply and demand.

The shortages we've experienced over the last several years have been the result of a displacement between these two factors.

At the beginning of the pandemic, demand for paper products like pressure sensitive adhesive (PSA) labels rose dramatically in a short period of time.

Supply couldn't keep up. So when the UPM strike occurred, it greatly exacerbated the shortage.

But now the market has shifted.

Previously, companies were buying as much paper as they could to try and build inventories, but struggled acquiring supplies due to additional supply chain constraints:

• Long lead times
• Port bottlenecks
• Trucker shortage

However, supply chain issues have been resolving as things shift back to pre-pandemic standards. Orders began arriving as market demand started to drop. So much so that demand has plummeted over the last several months across the globe.

A FINAT 2022 report of Q4 showed European consumption of paper and filmic roll label stocks dropped 24% compared to the same time the previous year.

The news article states it's "the sharpest year-on-year decline in a single quarter recorded since FINAT commissioned the collection of quarterly statistics in 2003."

North America is also experiencing a paper capacity withdrawal.

A February 2023 report from Fastmarkets stated North American printing and writing (P&W) paper capacity declined 4.4 million tons. Demand for P&W also fell, with a decrease of an estimated 2.5 million tons over the last four years.

Supply issues also seem to be improving this year among print providers. A 2022-2023 survey from PRINTING United Alliance found that 61% of providers claimed material shortages as their biggest challenge, which is down from 95% last year.

Even large companies like Avery Dennison began implementing what they're calling a "remission scenario plan" or a range of cost reductions due to lower demand from customers.

Weak Q4 2022 sale results were below the company's previous forecast by ~$100 million, according to CEO Mitch Butier in a December 2022 Fastmarkets report.

At the time he blamed product overstock, stating, "Label converting customers are rapidly reducing their inventories after having over-ordered during the pandemic when these companies were experiencing considerable difficulty getting enough materials from their suppliers."

This considerable overhang of built up inventories is what converters and printers continue to work through now.

And until stocks begin to lessen, companies won't start ordering again, which is something we're unlikely to see happening until at least Q2.

Suffice it to say, the pendulum has now fully swung in the opposite direction as the urgency surrounding the paper supply has been removed.

However, this doesn't mean we won't see some unfavorable effects from current market conditions. Slow paper demand means paper production will also slow down, and we will likely see paper mills cut back for the time being.

This could end up going one of two ways:

1. Supply issues once demand bounces back
2. Mills will look elsewhere to make money

The label industry will have to wait and see what the rest of this year will bring.