Industry Lead Times

White and colored laminate are run through a die-cutting machine, making various label shapes and sizes.

As the global pandemic continues, the pressure-sensitive label industry has experienced a massive increase in demand. This demand increase combined with supply chain issues has had rippling effects throughout our industry. This page is dedicated to providing the most up-to-minute updates in the label industry.

Barcodes Inc. (March 18th, 2021) 

Customers of Barcodes, Inc. will see price increases on the majority of their label supplies beginning April 2021. This is due to the continuing challenges of increased raw material costs, base chemical costs, and extended lead times. Additionally, Barcodes, Inc. is also citing increases due to disruptions from:
  • COVID-19
  • Weather-related
  • Strained logistics pipeline
  • Struggling freight demands
They believe additional cost increases on raw materials and ongoing lead times will continue throughout 2021 and are encouraging their customers to work with their account manager for updates on prices, alternative sources for labels, and actions to help offset longer lead times.

DLS (March 9th, 2021) 

Another email update has been sent by DLS. Starting April 8, 2021, all of their Genuine Supplies products will experience a price increase. The need for this particular increase comes from major raw material providers having increased their prices on items like paper and film stocks. 

DLS also mentions costs being driven up due to the extreme winter weather conditions disrupting the supply chain and increasing the prices on base chemicals and materials. They assure their customers that their goal is to “keep costs increases to a minimum” and they are working to minimize the impact until the situation stabilizes.

Avery Dennison (March 8th, 2021) 

On January 22, 2021 Avery Dennison emailed their customers about an upcoming surcharge on polypropylene. Like other manufacturers and distributors, Avery Dennison was hit hard from the supply chain disruptions caused by the pandemic. Higher raw material prices, transportation costs, and high demand are just some of the causes for the price increases. 

Avery Dennison told customers that beginning February 22, 2021, they would be implementing a $0.020/MSI surcharge on polypropylene for Q1. More surcharges were set to follow in Q2:

  • Above $0.78/lb = $0.020/MSI surcharge
  • Above $0.88/lb = $0.035/MSI surcharge
  • Above $0.98/lb = $0.050/MSI surcharge
  • Each further $0.10/lb increase to the average reported price will result in an incremental increase of $0.015/MSI to the surcharge. 

In order to try and reduce the impact these increases are having on their customers and keep their North American facilities operating at full capacity, Avery Dennison has gone as far as air-shipping raw materials from their facilities in Asia. However, due to the continued increases plaguing the label industry, a 6% price increase on all North American products will go into effect April 8, 2021. Surcharges on polypropylene will stay in place. 

I.D. Images (March 8th, 2021) 

Last month, CEO of I.D. Images Brian Gale opened up about how current lead times were affecting his company. With lead times continuing to extend as material shortages plague the labeling industry, Gale laments that another blow has struck. Due to recent severe weather in Texas, shortages of critical chemicals are now expected. 

Gale states that they are “being put on allocation for several products” which may last anywhere from as little as 4 weeks to upwards of 12 weeks or longer. Prices for products will continue to rise as “demand exceeds supply,” and Gale begs readers to plan for the shortages and carry more inventory.

Abbott Labels (March 8th, 2021) 

Label manufacturer Abbott Labels has recently informed their distributors of price increases on all products which will go into effect April 7, 2021. Due to “a culmination of unforeseen circumstances in the raw material market” and recent extreme weather events hitting the southern part of the country where several of their facilities reside, key facilities have shut down and further shortened supplies. 

Abbott Label also states that despite material shortages and growing costs, they have invested in new equipment and software to “help curb growing material costs,” as they continue to increase with no signs of slowing down in the near future.

Spinnaker Coating, LLC (March 3rd, 2021) 

Due to the ongoing inflation with raw materials, along with constraints to the supply chain and capacity challenges and costs of transportation, Spinnaker is having to increase their prices on all pressure-sensitive roll products. Effective on orders before and after April 5, 2021, customers can expect an average price increase of 6%. However, “[p]rice quotes…issued on or after February 1, 2021 will be unaffected.”

Spinnaker also notes that freight and logistics costs and capacity are “an ongoing challenge” for all industries. They will continue to make adjustments to freight costs, and warn customers that “the current freight surcharge is expected to increase by $0.002” beginning on May 1, 2021.

DLS (March 3rd, 2021) 

DLS sent their distributors an email update regarding thermal ribbon delays for the month of March 2021. Production and shipping capabilities, which were already experiencing delays due to the pandemic and the expanding demand for thermal printing supplies, have been pushed even further with the addition of current extreme weather conditions. As a result, lead times for thermal transfer ribbons are now longer than normal. 

As DLS states, the longer lead times are “industry-wide and beyond [their] control.” Currently, the lead times for thermal ribbon are around 3-5 days for stocked items and at least 30 days for non-stocked items.

Essendant (March 1st, 2021) 

National distributor Essendant recently notified their customers of upcoming paper price increases, which they attribute to a rise in transportation costs, multiple manufacturing costs, and raw material costs. These price increases, ranging from 6% – 8%, will be updated by mid-March 2021 and effective to Essedant customers beginning April 1, 2021. They are encouraging customers to update their price files as soon as possible.

DLS (February 16th, 2021) 

In early January 2021, DLS, a label converter, warned distributors of the delays raw material providers were experiencing in getting label stock produced on time, and how the demand was far exceeding supplier capacity.

They highly recommended end-user customers be notified of the current industry disruptions and urged to order early, at least one month ahead for standard thermal transfer and direct thermal label needs, citing transportation issues related to trucks and drivers adding in product and shipment delays.

DLS is once again warning distributors of the supply chain issues for their raw materials caused by COVID-19. 

While costs on items like corrugated cartons and plastic bags have been on the rise since mid-2020, they are admitting that cost increases are now moving to affect raw materials. So far, increases have only affected certain stock items, but DLS believes that it is only a matter of time before other stocks increase as well, leading to price increases for all stock and custom products that they supply. 

DLS also warns of shipping costs increases in the foreseeable future due to soaring freight costs. Record high backlogs have doubled lead times for thermal transfer (TT) and direct thermal (DT) stocks while lead times for specialty materials are expected to triple. Ultimately, this has caused their own lead times to lengthen to the point of advising customers to plan for 15 to 20 day lead times on standard orders. 

The label converter advises that the supply chain and freight issues will be ongoing and do not look like they will be resolved any time soon. For these reasons, it is imperative that distributors notify customers about upcoming price increases and place orders as soon as possible, the earlier the better.

General Data (February 15th, 2021) 

General Data, a provider of labels, printers, equipment, and more, posted on their blog on February 15th that due to COVID-19 causing “significant disruptions,” price increases are imminent. A surge in demand for raw materials and chemical manufacturers combined with labor shortages, illness, quarantines, and safety protocols has left the global supply chain in chaos. 

General Data admits that due to the above dilemmas, their suppliers have “already imposed price increases and are telling [them] to expect more price increases in the foreseeable future.” They are experiencing price increases due to:

  • Material prices adding to the overall cost of a label
  • Increased transportation costs
  • New costs for cleaning and sanitizing equipment and workspaces
  • Increased costs for additional items like stretch film, corrugated cartons, and pallets 

General Data says they are actively working to “minimize the impact” that these changes will have on their business and customers. However, they are unable to avoid extending order lead times and increasing the prices of some of their materials. Furthermore, they anticipate “general price increases on all stock and custom products in the very near future.” They are advising customers to plan ahead as best as they can.

I.D. Images (Feb. 15th, 2021)

An honest and open admission to industry issues came from the president and CEO of I.D. Images, Brian Gale. Gale admitted in his blog on February 15, 2021 that I.D. Images, a pressure-sensitive label converter in Ohio, is experiencing lead times for materials as long as eight months, which is an astronomical delay in business.

He also made a note about seeing normal one or two day lead times extended around three to four weeks. Taken aback by the extreme timelines, Gale advised his readers to start contingency planning as soon as possible in order to make accommodations. For the time being, he says, “short lead times are gone.”

FLEXcon (Feb. 12th, 2021)

Label manufacturer FLEXcon let their customers know in mid-February that they had no other choice but to make price adjustments due to current market conditions. Increased costs on raw material components – films, adhesives, and liners – have caused a 4.5% price increase that will go into effect on all orders placed on or after March 15, 2021.

Green Bay Packaging Inc. (Feb. 12th, 2021)

Customers of Green Bay Packaging will see new price adjustments due to significant inflation on freight costs and polypropylene film face stock that can no longer be absorbed by the company. Two price adjustments were sent via email to customers addressing the escalating costs:

  1. Prices on all products are set to increase by $0.003/MSI 
  2. Prices on products with polypropylene film face stocks are set to increase by $0.02/MSI

All shipments of Green Bay Packaging and Citadel products as of March 15, 2021 will be affected by these price increases.

Strata-Tac (Feb. 11th, 2021)

Label coater and laminator Strata-Tac are working with their supply chain and raw material suppliers to ensure they are still able to provide their customers with high-quality products at a reasonable price despite increasing costs. However, prices on all film and paper products, “including pressure-sensitive, non-pressure sensitive, and top coated products” are on the rise and will go into effect on or after March 15, 2021. These increases will affect:

  • Pricing on all Strata-Tac products, excluding their “IM” premium matte inkjet/laser cross-platform top coated products by 6%
  • All Strata-Tac “IM” premium matte inkjet/laser cross-platform top coated products with “IM” in their product code by 9.5%

Some of these increases are due to a significant rise in raw materials associated with producing specialty coatings.

UPM Raflatac (Feb. 3rd, 2021)

UPM Raflatac let their customers know that they have been experiencing inflation on specific raw materials and a considerable increase in freight costs. In particular, prices for polypropylene are skyrocketing, “mainly due to limited upstream capacity.” Despite trying to offset cost increases, beginning March 8, 2021 UPM Raflatac will adjust label stock products with polypropylene face materials by 4%. Furthermore, all label stock materials will be subject to an adjustment of $0.003/MSI in order to help compensate for freight cost increases.

Technicote (February 2021)

Label manufacturer Technicote released an email to customers in early 2021 that their company can no longer absorb the rising increases due to costs on freight and ocean containers coupled with constraints on key raw materials. 

Effective March 1, customers of Technicote will see a price increase of $0.02/MSI on their polypropylene products. Additionally, a $0.02/MSI increase on Smudge Latex and $0.045 on 3.7 Mil Smudge-Proof Kimdura products will also go into effect. Technicote states that despite the current “volatile market” they will continue to monitor the situation and do their best to minimize the impact to their customers.

Mactac (February 2021)

Mactac is announcing price increases on their roll label stock starting March 29th, 2021. These new prices will include a 4.5% increase on all polypropylene products and an increase of $0.003/MSI on all Mactac products to help offset inflation due to logistics and freight. According to Mactac, polypropylene costs have gone up considerably due to:

  • Rising oil prices
  • Record high demands
  • Reduced ocean freight capacity
  • Constrained production in North America

Mactac states that they tried delaying the increases for as long as possible, hoping the market would normalize, but “the magnitude and rate of increasing” material, logistic, and operating costs are too significant. 

Domtar Paper (Jan. 19th, 2021)

Back on January 19, 2021, Domtar Paper sent out an email to customers letting them know of a price increase on coated and uncoated thermal stock, label and release papers. The increase of 12% was set to go into effect March 1, 2021.

Below are the listed factors causing the current supply chain disruptions and lead time extensions.

2020: The Year That Changed Everything

2020 was the year that turned the world upside down.

The impact of the COVID-19 pandemic accelerated eCommerce growth to new heights. Because of stay-at-home order initiatives, an explosion of online orders and shipping swept the world like a tidal wave. This steady growth directly affected the labeling industry, increasing demands for packaging and shipping supplies.

As online business continued to thrive throughout 2020, paper mills and laminators became oversold on their raw material inventories, which plummeted as a result of high demands. This marked effect has been felt completely across the paper and label supply chains, directly causing lead times to double and triple their normal standards.

The Boom in eCommerce 

Stay-at-home orders began to go into effect within the first quarter of 2020, with people not only placing online orders, but ordering more due to widespread panic. According to Statistica, eCommerce sales in the US jumped from $160 million in the first quarter to $210 million in the second quarter. These sales factored into the vast amount of labels being used for shipping and packaging.  

As inventories dwindled, paper mills struggled to keep up with orders, resulting in label stock production falling behind. This domino effect has led to the current industry issue of longer lead times to laminators, converters, and, ultimately, end-users.

Global Companies Raising Their Prices 

Because of shortages, the following specialty paper producers have announced plans to increase their thermal paper prices effective between January and March 2021:

  • Hansol (South Korea): 10 – 15%
  • Koehler (Germany): 12%
  • Oji Paper (Thailand): 8 – 10%
  • Lecta (Spain): 10-12%
  • Mitsubishi HiTec Paper (Japan): 15%
  • Jujo Thermal (Finland): 12% 
  • Domtar (North America): 12%

Why Are Prices Increasing?

So why are we seeing these companies increase their prices? Many are citing the following issues as the source:

  1. Raw material shortage
  2. Freight prices
  3. Logistic issues and costs

Raw Material Depletion 

Raw materials for labels sit in a warehouse waiting to be moved.

Prices for materials like resin escalated throughout 2020 despite limited availability. Market prices ended the year continuing to peak, with polyethylene (PE) prices up $0.24/lb and polypropylene (PP) prices up $0.29/lb at the end of December.

The supply and demand for pulp has also driven upmarket prices, which are already spilling over into 2021. North American producer Resolute scheduled an increase to their prices on northern bleached softwood kraft (NBSK) $110/tonne and southern bleached softwood kraft (SBSK) $130/tonne starting February 1. Fluff pulp is also expected to rise $65/tonne in both North America and Europe.

Freight Prices On the Rise 

A container ship along a port transports supplies and goods.

Further driving up industry prices are increases in freight. According to Freightos.com, 77% of importers said they experienced disruptions in shipping due to Covid-19, with conditions not expected to change in the first quarter of 2021 as the supply chain attempts to recover. 

The demand for more products has pushed shipping to maximum capacity, causing freight rates to soar to an all-time high not seen within the last decade. By the end of December 2020, they were up 6.0% YoY, double than what they were just the previous month at 3.0% YoY.

Expenditures also reached an all-time high in December 2020, maxing out the year at 13.0% YoY, more than double the 5.7% YoY in November. 

Due to the increased shipping, a shortage in containers has led to further price hikes. Carriers are changing their rates, adding new surcharges and leasing prices. This is causing a disruption in the maritime supply chain process and creating havoc for shippers, which could have long-term damaging effects if the market doesn’t bounce back.

Logistics Obstacles 

A truck drives on the highway to show one method of transportation.

Freight costs aren’t the only factor leading to price increases. Port congestion has led to further supply chain disruptions, causing a bottleneck effect at many main ports. Import volumes skyrocketed in the back half of 2020, which caused dwell times to double what they were as dozens of ships waited offshore for docking space to become available. 

Along with ocean ways struggling under the weight of supply chain turmoil, roadways are dealing with their own problems. 

Container movement through port facilities has seen empty containers quickly sent back to Asia instead of moving inland to other states, where valuable goods are waiting to be shipped. 

Companies are having difficulty recruiting new drivers in order to keep up with high demands as state CLD (certified drivers license) agencies are limited or closed due to lockdown restrictions. This reduces in-person instruction and on-the-road training needed to get new drivers certified, leading to an industry-wide shortage.

Longer Lead Times Are Unavoidable 

When combined, the above factors have contributed to the disruption of the label supply chain, making standard lead times much longer than normal. Lead times for supplies that would typically take days have been stretched to weeks amid the chaos. 

The boom of eCommerce orders saw many smaller businesses buying desktop printers for shipping and barcode labels. These printers use direct thermal labels and as a result, they are currently harder to obtain than thermal transfer.

Adapting to Early Pandemic Changes in 2020

Companies like Grace Imaging were proactive in early 2020, which ended up greatly benefiting them as supplies progressively depleted throughout the year. Grace Imaging increased their inventory in mid-March 2020, allowing them the continued ability to ship because they had the materials to do so when other label companies were unable to.

Another label converter, Great Lakes Label, said they had some disruption because of the pandemic and had to enact a secondary material supplier due to changes in the supply chain. 

Other companies are citing “potential” supply chain issues and have stated that the pandemic hasn’t truly affected them, but with the above data showing the chaos 2020 brought to the label industry, there are no doubts that any “potential” supply chain issues affecting companies are a reality.

Where Do We Go From Here?

Predictions for the 2021 supply chain market are hopeful, however, nothing is certain. 

Experts are speculating things could normalize within a couple of months but with how unpredictable 2020 was and how current prices for label materials are on the rise until further notice, there’s no telling when that could be. 

Adapting to the longer lead time dilemma as best as possible should be the main focus for label industry companies moving forward.

*Editor’s Note: This article was published on February 16, 2021. It will continue to be updated as new information on the subject is made available.

References
  • https://www.statista.com/statistics/187443/quarterly-e-commerce-sales-in-the-the-us
  • Fastmarkets RISI
  • https://www.plasticstoday.com/resin-pricing/weekly-resin-report-recapping-mad-mad-mad-mad-year-resin-market
  • https://www.plasticstoday.com/resin-pricing/weekly-resin-report-unique-set-circumstances-creates-uniquely-challenging-market&sa=D&ust=1611930789275000&usg=AOvVaw3Ex4yorVoz1obbO1URp_Om
  • https://www.freightos.com/freight-resources/coronavirus-updates/
  • https://www.labelandnarrowweb.com/issues/2020-07-01/view_features/mid-year-economic-report/
  • https://briansblog.idimages.com/order-early-and-order-often/