14 Feb Paper Prices – will they stop rising?

Paper Prices – will they stop rising?

Over the past months paper prices have gone in one direction – upward. Just like the whole global economy was shaken to the core by the pandemic, it has seemed that as the first day of January, April, July and September approached, so too did a letter from the paper merchants informing us that another rise of 5% to 8% would be required. Just have a look at Foex to see the upward trend in the graphs.

And it’s not just the UK. In North America, paper prices are skyrocketing too. But while their price rises are driven mostly by lack of mill capacity and a tight labour market, over here it’s more of a perfect wave of latent demand fuelled by the pandemic together with the closure of paper mills alongside other mills switching from paper to board for packaging production in response to the demand from e-commerce.

And of course, paper mills themselves are also facing the double-whammy of increased costs from their own supply chains for things like chemicals and plant, along with the much heralded challenges in logistics and distribution.

Now of course, there are huge hikes in energy prices leading to pricing surcharges on paper which are inevitably passed on to print buyers and their customers.

And with the aftershocks of the pandemic still being felt, our print and paper gurus expect these testing times to continue for the forseeable future. Which isn’t ideal… but there are steps you can take.

What to do about paper price rises?

If you’re a print buyer, it’s a stressful time there’s no getting away from it. Now more than ever you need to spread your net as wide as possible and open your organisation to as many print and paper sources as you can.

As an offline marketing specialist, our dedicated print category management team has never been so busy securing supply and liaising with suppliers. There is paper out there and we’re managing to source capacity for our customers, but it’s all very tight and ideally needs careful strategic planning.

Thankfully, we work with a wide range of commercial printers and paper mills so we have broad reach in terms of supply. But we’ve had several organisations approach us because they’ve been let down by their suppliers who can’t either source paper or deliver their expected capacity at the time the customer needs it.

Which is where tight and long-standing supplier relationships are vitally important, alongside regular communication to keep everyone abreast of developments.

In most cases our team has performed minor miracles to place work, but it’s a far from ideal situation for all involved.

Planning ahead is key

So, our major piece of advice to our customers and everyone else who uses print is to really plan ahead. Plan, communicate and hold regular updates with your print supplier. And now more than ever, have a plan B in place. Because, putting all your eggs into one basket at this time might well leave you with egg on your face.

As to how long supply shortages and increase in paper prices will continue, our crystal ball’s looking decidedly cloudy at the moment, but the feeling is that pandemic-related problems will continue hitting paper supply chains for the forseeable future. And the drive to more sustainable packaging away from plastics, coupled with energy price pressures as the world drives towards sustainable energy production, all may well keep the demand for paper – and it’s price – higher than we’d like.

Of course, while this is certainly unwelcome news for marketers who get caught in the crossfire, the welcome news is that this is part of a move towards more sustainable products and marketing in general. And with FSC and PEFC papers being a very environmentally sustainable option (versus, for example, digital campaigns driven by non-green energy sources and lower response rates) and climate positive distribution now being available (see Enviromail), paper-based marketing is being increasingly seen as a truly environmentally friendly alternative.

In the meantime, if you’re in the UK and concerned about your supply security, feel free to give Webmart a call to discuss your options and make alternative (or plan B!) arrangements. Please fill out the form below and we’ll get the ball rolling.