Toilet paper is next likely victim of world's container crisis

Significant disruptions to the pulp trade could eventually impact supplies of toilet paper if producers don't have ample inventories.
Significant disruptions to the pulp trade could eventually impact supplies of toilet paper if producers don't have ample inventories.PHOTO: AFP

SAO PAOLO (BLOOMBERG) - The world really doesn't need more toilet paper problems. But unfortunately the biggest producer of wood pulp - the raw material for products including bath tissue - is warning that the global crunch in shipping containers could start creating supply snags.

Suzano SA primarily ships its pulp in cargo vessels known as break bulk. With demand surging for ships that carry ribbed steel containers, the squeeze is starting to spill over to break bulk and threatens to delay the company's shipments, Chief Executive Officer Walter Schalka said in an interview.

Of course that's happening at a time when demand for residential toilet paper has gone way up and consumers have taken to stockpiling and panic buying. Schalka is concerned that the shipping problems are going to snowball and only get worse from here. Significant disruptions to the pulp trade could eventually impact supplies of toilet paper if producers don't have ample inventories.

Sao Paulo-based Suzano is already concerned about the risk of exporting less in March than the company had expected, and being forced to roll over some shipments into April, Schalka said. With competition increasing for cargo vessels, break-bulk ships are berthing at the company's terminals less often than usual.

"All the South American players which export through break bulk have faced this risk," he said.

Brazil is the world's top supplier of pulp, and Suzano accounts for about a third of global supplies of hardwood pulp, the type used to produce toilet papers.

Cargo-market disruption are playing havoc on global trade, especially for food and agricultural products. Port traffic has gotten snarled, freight costs have gone up and deliveries have slowed.

The container crisis, sparked by huge demand from China, has been playing out for months. But Suzano's warning is among the first major signs showing the spillover into other shipping markets. If the squeeze continues to increase freight costs, it also raises the spectre of accelerating inflation.