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Why are label costs and lead times skyrocketing?

Why are label costs and lead times skyrocketing?

The last half of 2021 brought unprecedented supply chain disruptions to 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.

Label Material on Roll at Print.Save.Repeat.

The current imbalance in supply and demand in the label industry has forced Print.Save.Repeat. to increase our label 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.

Materials shortage affecting supply.

The label industry is currently facing a liner shortage. 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, one of the largest employers in Finland, 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 now 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.

Price increases from our label raw materials suppliers.

One step up the supply chain from Print.Save.Repeat. are our label materials suppliers, known as laminators. They work with large rolls of paper facestocks and coat the paper with specific adhesives and protective coatings. The large master rolls of coated label material are cut into smaller rolls that our "narrow web" converting equipment can handle.

label paper in warehouse

Our suppliers have raised materials 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 that 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 equilibrium.

Print.Save.Repeat. sources raw materials from multiple label laminators including, Avery Dennison, FLEXcon, Green Bay Packaging, Mactac, Ricoh Electronics, Technicote, and UPM Raflatac. All of these laminators have given multiple price increases over the past 12 months.

Despite these price increases, market demand has not slowed and we remain on allocation for most products. We expect continued price increases from the laminators until the market finds an equilibrium of supply and demand.

We are prepared and determined to succeed.

The market in 2022 for labels is volatile. The label market is not in equilibrium so we should expect continued price increases as both supply is constrained and demand for labels is increasing.

Our team at Print.Save.Repeat. will continue to do everything we can to support your essential business operations with the label products we produce.

Strategic partnerships with key suppliers, increased communication, forecasting and transparency will be needed to navigate this unprecedented and volatile market for labels which have become so essential to everyday operations in all industries.

March 22, 2022 by Errol Berry, CEO, Print.Save.Repeat.

Label Material on Roll at Print.Save.Repeat.

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