What We Know
- Paper prices continue to increase due to a major imbalance in supply and demand, compounded by increased input costs.
- The US labor shortage, mill closures and consolidations — even conversions to alternative paper products such as corrugate — have decimated the paper supply landscape and this trend is likely to continue.
- Some papers are no longer available or in very short supply, and as a result…
- Substitution is necessary.
- Consumers of paper are all vying for a finite supply that doesn’t cover current demand, therefore…
- The paper mills are rationing paper to printers, so what the printer orders and what the printer gets are almost always two very different things.
- Even when stock is manufactured, there are frequent shipping delays.
- Lead times are horrific, due to ongoing supply chain issues, including driver and truck shortages.
But what we NEED to know is how all these factors can make your price and your schedule a moving target nightmare…
Let’s tackle pricing first. In the last ten months alone, there have been paper price increases by paper grade virtually every month. We get the word from the mills, and we alert our customers to the amount and timing of the increase as soon as we know it so that they have time to plan.
Here’s a snapshot that captures some of the increases we’ve seen for these paper categories:
Now, let’s suppose that you request a quote that involves a Grade 4 stock on March 15th. You receive your pricing, and your printer has supplied the quote based on knowing there will be a price increase on April 1st, adding the increase to the existing cost. You review your RFP and award the work to that printer on April 15th. Your printer checks stock to ensure that the Grade 4 paper you want is in supply. Surprise: it may or may not be. It may have been scheduled for delivery, then pushed out by a month or two. (In fact, these long lead times can mean that your printer is writing the quote with one price, but needs to adjust it based on the paper shipping under another price increase). Or, the paper mill may have arbitrarily cut the printer’s order. Hurdle #1 is ensuring paper is available when the work is awarded.
On to sending the print-ready files to your printer. In this scenario, let’s say you plan to send the files by June 5th. Again, will the paper be available when the job comes in? If not, will you need to consider a substitute? If it is available, at what price? Based on our example above, by the time the job comes in for production, that paper has increased again. A glance at the charts shows that these increases are coming on the heels of one another, and the increase amounts are escalating.
We all know that price increases are a result of numerous factors – lack of raw materials, mill closures, labor shortage issues—and yes, trucking labor shortfalls. Lately, a lack of able bodies to drive the trucks when the paper is ready to ship has become a larger problem.
This does feel like a nightmare with an erratically moving target – if there’s even a target at all, and indicators point to a continuation of this difficult situation. However, be assured that as Sheridan navigates these hurdles, roadblocks, and setbacks, you have the industry’s best and brightest negotiating—and winning—on your behalf.