Skyrocketing demand for boxes and packing materials during the pandemic has slashed paper production across North America, and it couldn’t have come at a worse time for retail companies.

“We’re starting to hear, ‘We’re out of paper,’” said Polly Wong, president of San Francisco-based direct-marketing firm Belardi Wong, noting that some of her clients already missed their fall advertising campaigns due to issues at the printers. Wong estimates that 100 million catalogs will not be printed or reach U.S. homes in time for the year’s biggest spending season as a result. “It kind of put our industry up in a panic.”

With some mills converting to cardboard to meet the spike in e-commerce deliveries and others shutting down altogether, more than 2.5 million metric tons of North American printing and writing paper capacity — or nearly one-fifth of 2019 levels — has come offline since the start of last year. That’s according to Kevin Mason, managing director for ERA Forest Products Research, a financial research company that specializes in paper and forest products. Normally, printers would look abroad for supply but soaring logistics costs and other markets’ own booming packaging demand have limited that option. U.S. imports of paper and paperboard by volume fell 9.7% last year. Now supplies of certain grades are so tight that some commercial printers can’t get the paper they want “at any price,” Mason said.

The catalog woes of retailers are just the latest pandemic-fueled disruption slamming the sector. Toilet paper and paper towels — prized commodities at the start of the lockdowns — are again in short supply in some locations, with a handful of grocers reinstating purchase limits to crack down on hoarding. Book publishers are also reporting challenges getting the paper and transportation they need to roll out new titles. Demand for paper products was already running high with the retail industry expecting its biggest back-to-school shopping season in at least five years after a year of virtual learning. 

Supply chain issues have roiled overseas markets as well. Supermarkets in the U.K. have faced sporadic shortages of everyday items, like toilet paper, in the run-up to and the wake of Brexit. London-based packaging maker DS Smith Plc, which operates nine paper mills in Europe and two in North America, cited “significant increases to the price of paper” during its earnings call earlier this month. “The paper market, as a market overall, is extremely tight. We’ve seen numerous price increases going through on paper. I wouldn’t be surprised if there were further increases because it is so tight,” Chief Executive Officer Miles Roberts said on the call, noting that the company has been able to get material due to its “deep long-term relationships.”

The North American paper crunch is more an issue of mill capacity and tight labor than rising raw-material costs. Lumber futures — which touched a record $1,733.50 per thousand board feet in May, helping drive up the cost of everything from toilet paper to wood flooring — have since fallen back near normal, closing at $643.00 on Friday.

In terms of the strained capacity in the U.S., “we’ve never seen it before,” said Mark Groff, vice president of sales for the eastern region at Nahan, a Minnesota-based catalog printing company with clients that include Patagonia and Warby Parker. “It’s affecting all of the printers in our business, which is affecting our clients.” The average price of paper has gone up as much as 16% this summer, he said. Nahan expects the tightness to persist through 2023.

The shortage is hitting companies like Pennsylvania-based firepit company Breeo, which put out its first print catalog ever in May after the pandemic spurred a sales boom the year prior. The campaign was successful, so the marketing team started to discuss printing a splashy holiday catalog. But the paper shortage helped quash that plan; it’s going to send postcards instead, said Alex Smoker, the company’s marketing director.

The recent squeeze marks a major shift for a sector upended in recent decades by the internet. Although mail-order catalogs used to be a mainstay of American shopping — consumers could once buy entire houses from the Sears catalog — demand for paper has been declining in an increasingly digitized world, spurring many paper mills to shift course. In fact, direct-mail marketing declined so much between 2008 and 2015 that the Direct Marketing Association changed its name to the Data & Marketing Association in 2017 before it was acquired by another trade group. But print has been slowly making a comeback. In 2018, even internet giant Amazon.com Inc. added a physical toy catalog to grab business after the bankruptcy of Toys “R” Us.

The trend only gained speed during the coronavirus pandemic. With more people spending time at home, retailers mailing physical catalogs have found a captive audience. At the same time, soaring online advertising costs combined with Apple Inc.’s new advertising tracking rules, which reduce companies’ ability to reach their targeted audience, have pushed more retailers back to print. Although paper catalogs were once seen as clutter, much of that marketing has since moved to email inboxes, making physical mailing almost a novelty.

Screen fatigue drives down the success rate of online advertising, and in the past year, “we’ve all been overwhelmed with more digital stuff,” said Jonathan Zhang, associate professor of marketing at Colorado State University. “Part of the allure of having a magazine or print material is that it cuts through the clutter.”