Why are label costs and lead times skyrocketing?

The last half of 2021 brought unprecedented supply chain disruptions in the label industry. Raw materials shortages and lack of capacity for pressure sensitive label materials have rippled through the labeling industry and many label printers and converters are backlogged with orders, affecting the entire supply chain for products and customers from all industries.

The current imbalance in supply and demand in the label industry has forced us to adjust pricing as all of the raw materials costs in the supply chain are continuing to rise.

We thought it would be helpful to share our view of the primary factors causing long lead times and rising costs.

Shortage Affecting Supply in the Market

Liner for labels: There is an ongoing labor strike in Finland where a significant portion of the global supply of liner (disposable backing) for label products is produced. UPM and the Finnish Paperworkers union have been at odds for over 90 days, and each passing week of work stoppage is going to further affect the global label supply chain. As the strike is ongoing, we do not yet know the full impact it is going to have in upcoming months on the North American and European label supply. Several label constructions are unavailable or currently at 120+ day lead times from our suppliers, including laser sheets, semigloss labels (frequently used in product labeling), and block out materials.

Increased Demand

• Price increases from the large label laminator suppliers.
  • Print.Save.Repeat. sources raw materials from multiple label laminators including, Avery Dennison, Ricoh Electronics, UPM Raflatec, MacTac, Green Bay Packaging, FLEXcon and Technicote. All of these laminators have made multiple price increases over the past 12 months, and despite these price increases, demand has not yet slowed and we remain on allocation with them for most products, so we expect continued price increases until the market finds an equilibrium of supply and demand. .https://youtu.be/NgPqyM3I_8o
• One step up the supply chain from Print.Save.Repeat. are our label materials suppliers, known as laminators. They work with large rolls of bulk paper facestocks and coat the paper with specific adhesives and protective coatings. They then slit huge master rolls of this material into smaller rolls that our "narrow web" converting equipment can handle. These suppliers have raised their costs to us multiple times in the last 12 months, and many of the suppliers have put us and their other customers on materials allocation. Allocation means than they will not accept orders for more than a specified amount of raw materials in a given month, which prevents their customers from hoarding, panic buying, or stockpiling raw materials.
• Supply and Demand are not in Economic Equillibrium

• The market in 2022 for labels is volatile. The market is not in equilibrium so we should expect continued price increases as both the supply is constrained and demand for labels is increasing. We will continue to do everything we can to support our loyal customers' operations and keep essential business operations functioning with the label products we produce. Strategic partnerships with key suppliers, increased communication, forecasting and transparency will be needed to navigate this unprecedented market for labels which have become so essential to everyday operations in all industries.