06/15/2021
To Our Valued Customers:
From the lockdowns that began last year to what appears to be a sharp economic rebound, the COVID-19 economic roller coaster is ever-present. Currently businesses and consumers are starting to notice some supply issues that have delayed shipments, caused shortages of certain products and increased costs.
I am writing today to say it is no different in the world of print. We have seen paper supplies become constricted and schedules move out, all while marketers appear to be clamoring to reach their consumers in reliable, effective ways. After meeting this week with our primary paper vendors, I felt it was necessary to inform you, our valued clients, of the current state of the paper industry.
Paper markets have become increasingly tight in 2021. Since the first of the year, we have seen the cost of coated paper (glossy, dull, satin) increase approximately 15%; corrugated (boxes) a 20% increase; and effective July 1 uncoated sheets (text and bond) an expected 10% jump.
So, why these increases? Paper mills are designed to run 24 hours a day, 7 days a week. They need to average 93 to 95% utilization over the year to cover costs and be profitable. Total paper demand fell by more than 20% in 2020 and several mills were shut down. Over the past few months there has been an uptick in paper demand but there is less domestic capacity to meet this increasing demand. This requires more dependence on imports with extensive lead times and shipping issues contributing to short-term supply issues.
Even though there is a push to Buy American, the reality is a high percentage of our paper comes from overseas. Typical delivery dates run 10-12 weeks. Today there’s an even bigger problem with imported products due to a shortage of shipping containers that is delaying shipments. Covid has seriously affected long shoremen in California which has greatly extended wait times.
It has been Starkey’s goal to align with and develop strong relationships with our vendors. It has never been more important than now. I have learned that one of our greatest weaknesses is a poor supplier. That’s why we have placed loyalty and longevity in selecting our vendors. We speak with our paper providers on a daily basis. They are doing an excellent job communicating with us and meeting our needs. But I have been told we have to be prepared for some pot holes in the coming months.
How can Starkey Printing work with you to smooth out these holes? In today’s market, scheduling is more important then ever… Maybe even more than price. It’s common practice in “normal times” for quick lead times and rush jobs to be fulfilled with ease. When capacities tightened, those orders become much more difficult to fill. I would suggest to plan your projects as early as possible and include our sales representative and CSR’s on the front end. We’ll be glad to keep you informed of the current state of our supply chain and communicate with our vendors to secure your needs.
The good news is that 2021 will be a stronger year than anticipated, providing the economic recovery stays its course – a welcome change for most of us after 2020. Relationships strengthen when the entire supply chain bands together, and it often results in a better product as a byproduct. With a basic knowledge of the paper markets, strong supplier relationships, and plan-ahead collaborative scheduling, your operation can come through 2021 stronger than ever with valuable relationships.
