As some of you may have heard, there is a tremendous amount of volatility in the paper market, both in pricing and availability.
Read on to see how this can effect your business and what you can do to minimize the negative impact.
There are 3 factors driving this volatility: pulp prices, capacity issues, and transportation shortages.
Pulp prices have increased 15% in the last 3 months, resulting in paper cost increases across the board.
You can clearly see the change in this chart.
If you have tried to do any construction or home projects during the pandemic, you have experienced the shortage and dramatic (188%) price increase in lumber.
The increased demand, in combination with supply chain challenges in the lumber industry, have a direct impact on pulp.
In addition to the increase in prices, mill capacity is running above 95%, essentially meaning that most mills are running at peak capacity. Because of the significant elimination of paper machines and mills over the past decade, this is contributing to demand exceeding supply - putting further upward pressure on prices.
Availability on certain types and grades of paper has been very limited. Most uncoated web papers are currently on a 5-8 week lead time. Additionally, a shortage in imports in sheetfed and digital paper has caused inventory problems as well.
Have you experienced delays in getting packages? Have you seen the dreaded "Pending" when you check your tracking number?
In the US right now, there is 1 truck and driver for every 4.8 truckloads ready to ship. This is creating a major problem, particularly in transporting heavy raw materials. Many of the challenges you are facing as a consumer are being faced by businesses as well and the dwindling reliability in the transportation industry is no exception.
What can you do?
There are some practical things you can do to ensure that your project stays on time and on budget:
- Timing is critical. Whenever possible, let your Account Executive know what your anticipated timing is for your project. This can have an impact on both pricing and availability. Many times your Account Executive can get information about pending paper price increases and availability and can work with you to develop a plan.
- Avoid last minute quantity changes. Adding an additional 10% to your quantity after a project was in production 18 months ago was no big deal. Today, there is a good chance that paper will not be available on such a short notice.
- Have a backup plan. We encourage you to be flexible regarding potential stock substitutes. Our experts can normally recommend a paper that is comparable and will have no discernible difference to what you initially specified.
- Earlier is better. Providing us with an "ok to proceed", even if your files or mailing lists aren't completely ready, gives us more time to work on making sure the raw materials are available for your project.
What is DSG | UW doing?
DSG | UW has a team of experts who focus on knowing the paper market and taking actions to ensure that changes in supply and price have the least possible impact on you.
In addition to constant negotiations, we are pre-ordering certain types of paper. This allows us to lock pricing in and ensure allotments with the mills.
We are also utilizing our expanded space in our new facility to increase our inventory on commonly utilized grades of paper.
As imports are now starting to loosen up, we are making commitments on paper coming from Europe which gives us better control of the inventory.
Our expectation is that some stability will return to the market in the late summer/early fall. Paper usage is up year over year, however the mills do not anticipate this to continue, so they are being very cautious about overproducing.