3 Global Catalysts Causing Thermal Paper Price Increases
Thermal printer supplies are often treated like a commodity at many companies, but thermal paper price increases are causing many companies to re-evaluate their printer consumables budgets. Companies can expect to see thermal paper price increases in the coming months, anywhere from 5 to 10 percent on some or all of the products they use in their thermal printers.
The Reasons Behind Thermal Paper Price Increases
Demand is high and product is becoming scarce. Many thermal paper suppliers, including Zebra, are feeling the pinch and have increased prices anywhere from 4 to 6 percent just this summer.
Why is this happening? There are three separate phenomena occurring globally that are driving these rapid thermal paper price increases.
1. The manufacture of leuco-dye, the main ingredient in thermal paper, has been slashed. This has resulted in a shortage of the material that isn’t expected to end any time soon. The Chinese government recently shut down approximately 40 percent of its factories as part of a crackdown on emissions. This affected nearly 80 percent of global production and sent prices of leuco-dye soaring — by as much as 500 percent in some cases. According to a statement issued by Zebra in June 2018, worldwide production of leuco-dye s down 30% compared to 2017.
2. Paper pulp prices are at an all-time high right now. In fact, wood paper pulp costs hit a record high earlier this year and are expected to rise over 5 percent through 2019. That has, in turn, led to an increase in all paper products. Part of the problem is the switch to single-stream recycling, which has contaminated a large segment of the paper pulp supply, along with increasing foreign demand for pulp.
3. Supply chain costs in the U.S. are rising in response to increasing transportation costs. Record shipment volumes from increased eCommerce sales from companies like Amazon and Walmart have put more pressure on delivery times, increased demand for both long-haul and last-mile transportation, and raised prices. At the same time, North America is suffering from an acute shortage of truck drivers. The market needs at least 51,000 more drivers in order to meet demand. The market is already affected and shipments are delayed.
Crude oil prices also recently hit a four-year high at more than $80 per barrel, which has further driven up transportation costs. So not only will you see thermal paper price increases, but also higher costs to move it from the factory to your facility.
A Strategy for Dealing with Higher Prices
The only way for label and tag converters to continue to fulfill the demand and account for rising raw material prices is to raise prices. You need to anticipate thermal paper price increases and develop a strategy to manage the increase through streamlined processes:
- Incorporate more effective printing methods and reduce waste to use less paper.
- Institute strategies for better purchasing through inventory management programs that can drive down costs.
- Assess what supplies you are purchasing and make sure you aren’t paying more for an expensive label material where a lesser product would work in the application.
Miles Data’s experienced team can advise you on how to operate more cost effectively. Our label assessment program identifies inefficiencies in your labeling procedures, and we can provide the solutions you need to correct them. Schedule a free on site assessment.