Paper pricing has been steadily increasing, with several upturns in the last 12-18 months, an anomaly for a spend category that has been stable and buyer-driven. We are seeing increases averaging 8-10%, with additional increases on some paper products as high as 15% pending in January.
Reasons behind paper price increases
- Increasing digitization and electronic commerce and communication have reduced paper demand, resulting in closings and consolidation of mills and other links in the supply chain.
- Rising paper pulp costs thanks to circumstances like increased foreign demand, less usable paper in recycling stream and weather. Hurricanes Irma and Harvey shut down eighteen pulp and paper mills in the United States. (Source: Strategic Sourceror)
- Most recently, trade tariffs on Chinese goods are affecting the paper industry.
Responding and planning
These factors are serving to re-balance paper markets; after years of weakened pricing power and margin pressure, the players that have survived are now in a stronger position.
With this new dynamic, you can begin responding with both immediate and long-term actions:
- Short-term: Monitor and conserve your consumption of paper products and identify more economical alternatives; monitor all invoices and shipments received.
- Long-term: Assess all existing paper product contracts; make sure no automatic renewals occur in 2019; identify supplier options.
We can help you ensure that the price increases you’re incurring are correct and valid, identifying and disallowing cases of invalid increases or price gouging. More strategically, we can help with contract management, vendor selection and RFPs in 2019 and beyond.