Stability from August 2014 until just over 15 months ago then bang!……
In September 16, it was 5.5%,
April 17, it was 10%,
Then August 17 it was 7% and now we have been told another by the end of January which could be another 10%.
This will affect most paper products including kraft paper, edgeboards and of course corrugated rolls, sheets and boxes.
Why is this happening?
Not enough capacity? Too much demand? Not enough paper to go around? Lack of innovation? Why has the last 15 months been so crazy? A total of more than 37% price increases in 15 months will test any company within the supply chain. Robert McEwan from Jemac Packaging did a quick search on google for some explanation and couldn’t find any up to date useful information, apart from the fact that paper is in demand. He said, “On-line shopping is on the increase, shelf ready packaging is still in demand, targets to reduce plastic packaging must have an influence on paper demand.” One supplier gave the reason as “tight containerboard market” (shortage of paper), “input cost increases” (cost of production of paper increasing) and “volatile recovered fibre outlook” (waste paper costs increasing).
What does this mean for you?
Unfortunately, this is not good news. Price increases like these are very difficult to absorb for any business, especially when 2017 was such a difficult year for corrugated. End user prices are going to be affected, which is never welcome, but a stark reality in today’s market.
How Jemac are lightening the load…..
Now is the time to rely on your account manager to do what they are best at to creatively minimise the effect of these increases. Different papers, packing methods, types of packaging can help to minimise the effects. Jemac have the experience and knowledge to be able to support you through this period and help in managing your costs. Speak to your account manager about what they can do to help. Also, the advantage of a bespoke solution to your box requirements rather than an off the shelf solution can reduce your costs. Speak to your account manager today to see what we can do to offset some of these price increases for you.
A small word of warning…..
Demand always increases at times like this – this means that raw material lead times can go crazy and finished product lead times can be extended. Sarah Gill from Jemac advises that you “look ahead and place orders for at least the next month. Whilst this may not hold the increase off, it will allow us to manage supply better.” Please speak to your account manager about this.
Date posted Mon 08 January 2018 in Blog