Alaina D'Altorio, Content Marketing Specialist, Smith Corona12.22.21
When the COVID-19 pandemic began in March of 2020, no one could have predicted the global supply chain crisis that has followed. What started as a click bait panic to buy toilet paper has extended into almost all aspects of our lives. From semiconductors to shipping containers, the world is running out of just about everything.
These issues have proliferated all the way to the label and ribbon industry. Businesses are now running short on shipping labels. How did we end up here? What specific events have led to shortages, price increases, and lengthy fulfillment delays in the label industry?
Our team at Smith Corona has chronicled every significant event in the pressure sensitive label industry since the beginning of the pandemic, highlighted below:
In March of 2020, COVID shutdowns halted supply chains. As the COVID virus spread globally, all links in the supply chain grinded to a halt, ceasing the production of goods. Stay-at-home mandates began to go into effect nationwide, causing businesses to close and lay off employees, ports to remove ships from service, and consumers switch to e-commerce shopping, which grew to 30% between Q1 and Q2.
BOPIS, curbside and online orders subsequently skyrocketed. As a way to stay in business and keep customers supplied, companies took an omnichannel approach to consumer access. Many temporarily shuttered brick-and-mortar storefronts and began to implement BOPIS (buy online pick up in store), which grew 208% from the previous year. Meanwhile, daily online grocery sales increased 110% in just four weeks.
In April of 2020, direct-to-consumer shipping expanded. The spike in demand for shipping direct-to-consumers increased to a rapid expansion. Traffic growth for items like fitness equipment grew 96.78% in April 2020 compared to the same month the previous year. Because of this, label orders for packaging, shipping, and pick up orders expanded rapidly.
Then in August of 2020, Hurricane Laura damaged petroleum reserves. The Category 4 storm slammed into the Southern US coast on August 20, directly hitting one of the nation’s strategic petroleum reserve sites.
More than 84% of oil production in the Gulf of Mexico and at least one-third of synthetic rubber capacity in the US were shut down between Texas and Louisiana in preparation. Rail shipments were also disrupted as inbound traffic was diverted.
In September of 2020, COVID amplified the truck driver shortage. The decline in truck drivers continued from previous years with 40% fewer drivers. Meanwhile, the industry failed to entice younger drivers while older drivers aged out and retired earlier than expected. Regulations prevented drivers from working extended hours, meaning they were unable to put in as many miles.
Subsequently, waves of establishments went out of business. Many small businesses that temporarily shut down in March experienced permanent closures. A report from Yelp.com’s Local Economic Average shows almost 100,000 businesses suffered from the unpredictable COVID economy.
In October of 2020, Hurricane Zeta further paused petrochemical production. The destruction that followed the Category 3 storm along the Southern US left areas in the Gulf scrambling to regain power. Two-thirds of the US Gulf crude oil volumes were shut in ahead of the storm. It was the sixth named storm to make landfall in the Gulf that season.
A Direct Thermal Anti-Dumping Lawsuit followed, where the US Department of Commerce initiated a look into Japan, Germany, Korea, and Spain to determine if they were dumping imports of thermal paper into the market at less than fair value. Offshore manufacturers began limiting imports into the US to mitigate dumping fines.
In November of 2020, the cost to ship goods hit an all-time high. US retailers stocking up ahead of the holidays contributed to high freight rates. The high demand for imports from Asia to the US pushed container rates past $4,000 per container. This also increased high demand for empty containers to be rushed back for reloading.
The lack of available containers worsened lead times. Bustling ports struggled to load and unload fast enough to keep up with the backlog of containers from the fall and rebound of global trade. As availability for 40FT containers waned, companies pitched the use of 20FT containers as a substitute. Labor shortages also attributed to containers stranded in ports and rail yards, unable to be picked up, delivered or recycled back into service at a steady rate.
In January of 2021, the label industry rolled out price increases. Label laminates and converters could no longer absorb the increased costs. They began emailing customers about impending price increases on their labelstock. Polypropylene face materials were especially affected, with surcharges of 4% or higher. Lead times then increased to four weeks. Lead times for receiving orders extended well past standard production and shipping capabilities. DLS warned of 30-day lead times for non-stocked items. Company-wide emails were sent out to customers recommending they place orders ahead of time to remain stocked.
Then in February, unusual weather disruptions affected chemicals. Unexpected winter storms and cold temperatures rocked the Southern US, where many oil refining and chemical manufacturing facilities reside.
Pipes froze and power was lost to chemical plants. In Texas, the freeze shut down 75% of polyethylene, 62% of polypropylene, and 57% of PVC production. Prices for these materials saw their biggest jump in 10 years.
In June, multiple countries banned silicone imports. The US, UK, EU, and Australia banned imports from Xinjiang, China due to human rights violations of forced labor using Uyghur slaves, including children. This region accounts for 45% of the world's production of silicone. The act violates international trade rules and damages the global industry and supply chains. In July, a lightning strike on July 13 affected LyondellBasell's Equistar Chemicals polypropylene (PP) plant in Lake Charles, LA. It knocked out the power center, shutting down all plant production lines. Waiting times for supply availability extended further. On July 28, 2021, LydonellBasell informed customers of a 100,000 pound acetic acid leak at their LaPorte, TX site from the previous day, July 27. Due to the unexpected incident, they declared Force Majeure on propylene glycol methyl ether acetate (PMA), which is used in coatings and inks. The incident impacted PMA supplies, which were already tight in the US prior to the incident.
In August, the COVID-19 delta variant surged. Positive COVID cases due to the new strain began to soar, especially in southern states like Florida. Staffing across the supply chain was affected, further disrupting production and extending lead times. 84,500 deaths were recorded in a two-month span. Plus, Hurricane Ida shuts down plants in the Gulf Regions. Multiple Louisiana oil refineries and chemical plants closed in advance of the Category 4 storm. They accounted for nearly one-fifth of the nation's refinery capacity. More than 95% of the US's Gulf crude oil and 94% natural gas went off-line.
In September of 2021, a second round of price increases hit. Laminators and converters sent out a second round of emails as material, production, and transportation costs continue to increase. One major supplier implemented a 9% increase on paper labelstock after an increase of 4% polypropylene labelstock earlier in the year on March 8, 2021. Global container prices continued to soar, too. Prices for 40-foot shipping containers reached record-setting numbers after continuing to climb from the previous year. According to Freightos, rates peak mid-September at $20,600 while Drewry marked prices at $12,400. Even when prices began to drift lower, they were still monumentally above standard rates.
In October, energy prices spiked globally. Due to a steep rise in prices for energy, particularly natural gas, chemical producers in Eastern Germany were on the verge of shutting down plants. Currently, they have the highest energy costs in Europe. In the US, natural gas prices have shot up more than 150% from last year.
As a way to alleviate the strain on ports, President Biden announced measures to resolve the congestion of ships waiting to berth and be unloaded. Record numbers of container ships waited weeks to dock. Anywhere from 50-100 ships sat in the waters just off the coast.
While a reprieve from the supply chain situation remains unclear for the foreseeable future, manufacturers and suppliers will continue to do their best to meet consumer demands. To guarantee your shipment of items, like thermal labels, order as soon as possible and be prepared for delays in delivery.
For an illustrated timeline of the events, click here to read the original article.
These issues have proliferated all the way to the label and ribbon industry. Businesses are now running short on shipping labels. How did we end up here? What specific events have led to shortages, price increases, and lengthy fulfillment delays in the label industry?
Our team at Smith Corona has chronicled every significant event in the pressure sensitive label industry since the beginning of the pandemic, highlighted below:
In March of 2020, COVID shutdowns halted supply chains. As the COVID virus spread globally, all links in the supply chain grinded to a halt, ceasing the production of goods. Stay-at-home mandates began to go into effect nationwide, causing businesses to close and lay off employees, ports to remove ships from service, and consumers switch to e-commerce shopping, which grew to 30% between Q1 and Q2.
BOPIS, curbside and online orders subsequently skyrocketed. As a way to stay in business and keep customers supplied, companies took an omnichannel approach to consumer access. Many temporarily shuttered brick-and-mortar storefronts and began to implement BOPIS (buy online pick up in store), which grew 208% from the previous year. Meanwhile, daily online grocery sales increased 110% in just four weeks.
In April of 2020, direct-to-consumer shipping expanded. The spike in demand for shipping direct-to-consumers increased to a rapid expansion. Traffic growth for items like fitness equipment grew 96.78% in April 2020 compared to the same month the previous year. Because of this, label orders for packaging, shipping, and pick up orders expanded rapidly.
Then in August of 2020, Hurricane Laura damaged petroleum reserves. The Category 4 storm slammed into the Southern US coast on August 20, directly hitting one of the nation’s strategic petroleum reserve sites.
More than 84% of oil production in the Gulf of Mexico and at least one-third of synthetic rubber capacity in the US were shut down between Texas and Louisiana in preparation. Rail shipments were also disrupted as inbound traffic was diverted.
In September of 2020, COVID amplified the truck driver shortage. The decline in truck drivers continued from previous years with 40% fewer drivers. Meanwhile, the industry failed to entice younger drivers while older drivers aged out and retired earlier than expected. Regulations prevented drivers from working extended hours, meaning they were unable to put in as many miles.
Subsequently, waves of establishments went out of business. Many small businesses that temporarily shut down in March experienced permanent closures. A report from Yelp.com’s Local Economic Average shows almost 100,000 businesses suffered from the unpredictable COVID economy.
In October of 2020, Hurricane Zeta further paused petrochemical production. The destruction that followed the Category 3 storm along the Southern US left areas in the Gulf scrambling to regain power. Two-thirds of the US Gulf crude oil volumes were shut in ahead of the storm. It was the sixth named storm to make landfall in the Gulf that season.
A Direct Thermal Anti-Dumping Lawsuit followed, where the US Department of Commerce initiated a look into Japan, Germany, Korea, and Spain to determine if they were dumping imports of thermal paper into the market at less than fair value. Offshore manufacturers began limiting imports into the US to mitigate dumping fines.
In November of 2020, the cost to ship goods hit an all-time high. US retailers stocking up ahead of the holidays contributed to high freight rates. The high demand for imports from Asia to the US pushed container rates past $4,000 per container. This also increased high demand for empty containers to be rushed back for reloading.
The lack of available containers worsened lead times. Bustling ports struggled to load and unload fast enough to keep up with the backlog of containers from the fall and rebound of global trade. As availability for 40FT containers waned, companies pitched the use of 20FT containers as a substitute. Labor shortages also attributed to containers stranded in ports and rail yards, unable to be picked up, delivered or recycled back into service at a steady rate.
In January of 2021, the label industry rolled out price increases. Label laminates and converters could no longer absorb the increased costs. They began emailing customers about impending price increases on their labelstock. Polypropylene face materials were especially affected, with surcharges of 4% or higher. Lead times then increased to four weeks. Lead times for receiving orders extended well past standard production and shipping capabilities. DLS warned of 30-day lead times for non-stocked items. Company-wide emails were sent out to customers recommending they place orders ahead of time to remain stocked.
Then in February, unusual weather disruptions affected chemicals. Unexpected winter storms and cold temperatures rocked the Southern US, where many oil refining and chemical manufacturing facilities reside.
Pipes froze and power was lost to chemical plants. In Texas, the freeze shut down 75% of polyethylene, 62% of polypropylene, and 57% of PVC production. Prices for these materials saw their biggest jump in 10 years.
In June, multiple countries banned silicone imports. The US, UK, EU, and Australia banned imports from Xinjiang, China due to human rights violations of forced labor using Uyghur slaves, including children. This region accounts for 45% of the world's production of silicone. The act violates international trade rules and damages the global industry and supply chains. In July, a lightning strike on July 13 affected LyondellBasell's Equistar Chemicals polypropylene (PP) plant in Lake Charles, LA. It knocked out the power center, shutting down all plant production lines. Waiting times for supply availability extended further. On July 28, 2021, LydonellBasell informed customers of a 100,000 pound acetic acid leak at their LaPorte, TX site from the previous day, July 27. Due to the unexpected incident, they declared Force Majeure on propylene glycol methyl ether acetate (PMA), which is used in coatings and inks. The incident impacted PMA supplies, which were already tight in the US prior to the incident.
In August, the COVID-19 delta variant surged. Positive COVID cases due to the new strain began to soar, especially in southern states like Florida. Staffing across the supply chain was affected, further disrupting production and extending lead times. 84,500 deaths were recorded in a two-month span. Plus, Hurricane Ida shuts down plants in the Gulf Regions. Multiple Louisiana oil refineries and chemical plants closed in advance of the Category 4 storm. They accounted for nearly one-fifth of the nation's refinery capacity. More than 95% of the US's Gulf crude oil and 94% natural gas went off-line.
In September of 2021, a second round of price increases hit. Laminators and converters sent out a second round of emails as material, production, and transportation costs continue to increase. One major supplier implemented a 9% increase on paper labelstock after an increase of 4% polypropylene labelstock earlier in the year on March 8, 2021. Global container prices continued to soar, too. Prices for 40-foot shipping containers reached record-setting numbers after continuing to climb from the previous year. According to Freightos, rates peak mid-September at $20,600 while Drewry marked prices at $12,400. Even when prices began to drift lower, they were still monumentally above standard rates.
In October, energy prices spiked globally. Due to a steep rise in prices for energy, particularly natural gas, chemical producers in Eastern Germany were on the verge of shutting down plants. Currently, they have the highest energy costs in Europe. In the US, natural gas prices have shot up more than 150% from last year.
As a way to alleviate the strain on ports, President Biden announced measures to resolve the congestion of ships waiting to berth and be unloaded. Record numbers of container ships waited weeks to dock. Anywhere from 50-100 ships sat in the waters just off the coast.
While a reprieve from the supply chain situation remains unclear for the foreseeable future, manufacturers and suppliers will continue to do their best to meet consumer demands. To guarantee your shipment of items, like thermal labels, order as soon as possible and be prepared for delays in delivery.
For an illustrated timeline of the events, click here to read the original article.
