SPIRALLING SHIPPING COSTS PUSHING PAPER PRICES HIGHER

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Skyrocketing shipping costs are impacting paper, board, and wide format media prices, with the nation’s major printable materials suppliers forced to introduce price rises from next month, which will range from three to nine per cent.

Under pressure: shipping costs
Intense pressure: shipping costs

The country's two biggest suppliers, Ball & Doggett and Spicers, both say they are unable to absord the rapidly escalating costs, even with the stronger Aussie dollar. Spicers prices will rise on 1 March, Ball & Doggett on 15 March.

Shipping is under intense pressure, with a lack of containers, surging demand thanks to online shopping, and a consolidation of the industry, which in Asia has resulted in just three major lines, giving them significant market power.

David Martin, CEO at Spicers said, “Shipping costs rose rapidly last year, we sucked them up thinking they would fall back after Christmas, but that has just not happened, and it is not going to anytime soon.”

Spicers has averaged out the rise across its portfolio, and instigated a three per cent rise across all grades, whether locally manufactured or imported, including commercial, digital, labels, industrial packaging, and sign and display. However, rigid display stocks will go up by eight per cent. Its prices will rise on 1 March.

Ball & Doggett prices will go up two weeks later. Commercial print grades will rise by three to four per cent, industrial packaging and food service grades by three per cent, fibre based packaging/cartonboard by five to nine per cent, while display and visual grades will have rises of between three and seven per cent. The new prices will come into effect on 15 March.

In addition, Ball & Doggett's graphics press consumables costs will rise by between three and five per cent, and its laminating film by five to nine per cent.

The big two will not be alone, as all suppliers of imported goods are facing the same issues.

The increases would have been significantly higher were it not for the resurgent Aussie dollar, which has steadily battled up from 67c to the greenback a year ago, to its current 76c-77c marker.

Print21 foreshadowed the likelihood of rises due to shipping issues with an article in November highlighting the collision of forces that are impacting supply and forcing prices up. Read the story here.

In a communication to its customers due to go out on Monday, Ball & Doggett says that while it is "mindful of the impact changes in supply can have on our customers and the industry in these uncertain times", it has to pass the costs on, saying, "We have been challenged with significant delays in imported product due to a global shortage in containers and vessels. These supply-chain issues have meant ocean freight rates have increased significantly and we have received price increases from many key suppliers."

Dale O'Neill, general manager - Print and Packaging, Spicers Australia, told customers that the company was facing “massive price increases on the hiring and shipping of containers to their global customer base”, and said, “Unfortunately, the Australian market has been hit particularly hard by these increases.”

In the UK, there is actually a cardboard shortage going on, due entirely to restricted supply from lack of available space on shipping lines. Over there Sappi has just raised its prices on commercial grades by eight to 10 per cent.

Cost of a typical 20 foot container from China and Asia to Australia has risen from $950 in August to approaching $3,000 today. In addition, supply is becoming constrained, as exporters and importers bid for space on a tightening number of ships. And these issues are not only isolated to Asia, as they are affecting all shipping channels into Australia.

Containers themselves are in short supply, with foreign ports, including those in Australia, piled high with empty containers yet to be taken back. In many cases having 150 per cent of empty capacity taken up.

Critics also accuse the shipping lines of sending out blank lines, or ghost ships, on established routes, to take supply out of the market in a bid to force up prices.

In addition, importers are facing increased costs at Australian ports and ongoing industrial action, with major port operators Patricks and DP World both suffering labour issues.

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