Paper is increasing in cost again! And the timing to get paper is becoming longer and longer.
Custom stock and roll sizes can take several weeks to source as mills are running into the same issues as many other businesses: getting folks to come to work, fill equipment to run, and keep up with the demand.
The latest word is that by July 1, paper will see an increase of $4.00cwt (that’s $4 per 100lbs).
This would be an increase of 8% — an unprecedented increase. When a Mailshop gives an estimate of how much a job will cost your organization, paper typically represents 50%-60% of a quoted price. The remaining cost goes to labor, overhead, delivery, ink, folding, etc.
That means that with an 8% increase in paper, your quoted price for envelopes, letters, etc. will be about 5% higher than expected. cwt
The Next Step
The dreaded word, allocation.
For those not familiar with how this one works, it basically looks like this:
Mills can’t meet demand. So they allocate inventory to printers and converters based on how much they buy and how much they have used over the last year.
Example
Let’s say company “A” bought $10,000 worth of paper in the past year. When put on allocation, they can only buy:
- The same as last year
- 90% of what they bought last year, etc.
The percentage they get will be based on supply.
The scary part is some printers could struggle to get paper. This is where suppliers’ strong relationships with paper manufacturers or merchants will play a key role in getting paper when needed.
How does this affect you?
Factor in more time for projects. Getting paper will take longer, and of course with these announced price increases, it will cost more.
How Can CCAH Help?
- We are starting early — making decisions on packages sooner so production can order paper before the art is released.
- We’re talking with our production managers directly, asking about specialty stocks far in advance of wanting to use them. We’re thinking about places we may have flexibility with the paper stocks we are using.
- We’re being thoughtful on where strategy can change and where we won’t have wiggle room. Making major changes to package specifications midway through a job may spell big problems — if we have already ordered a special paper and the paper specs change — that original paper is still yours … the good news is you would have it available for your next mailing, or you could sell it to another supplier client if the need arose.
There is some uncertainty still, but it looks like the fall will be very similar to last year with paper challenges. Please plan ahead. And if you have any questions, please leave a comment below or send me an email at smurphy@ccah.com.