David Savastano, Editor10.14.21
The ink industry, much like virtually the entire business world, has been under tremendous pressure due to raw material supply and cost issues. In addition to the COVID-19 pandemic and supply disruptions, there have been severe weather issues that led to plant shutdowns. On top of that, transportation and logistical pressures, such as dramatically higher container costs, are heavily impacting prices as well as causing scheduling disruptions.
Because of this, there have been numerous announcements of price increases from ink companies. In the last six months alone, Sun Chemical, hubergroup, EFI, Doneck Network and Central Ink announced price increases, while Flint Group recently warned of significant price and supply pressures.
“The satisfaction of our customers is our top priority,” said Heiner Klokkers, CEO of hubergroup, in announcing the increases. “To ensure that we can continue to offer them high-quality printing inks and raw materials in the future, it is unfortunately essential in the current situation that we reflect the significantly increased procurement costs in the prices of our products.”
“We have seen force majeure scenarios in a number of sectors and suppliers only willing to guarantee fixed proportions of their capacity,” added Vijay Patel, global supply chain director - Flint CPS, in a release discussing the concerns that ink companies are facing. “Global logistics, crude and supply constraints and cost increases have all resulted in costs being passed throughout the supply chain. We are anticipating the disruption and cost impacts to continue to at least the end of the year with further price increases to follow as a result.”
These pressures aren’t just limited to inks. Key pigment, resin and solvent suppliers have announced higher prices.
“Issues between supply chain and logistics throughout 2021 have created the ‘perfect storm,’ which has impacted every business,” Ken Klug, Wikoff Color’s purchasing director, observed.
The Present Situation
Raw material concerns have been ongoing for the last few years, predating the COVID-19 pandemic. Typically, these disruptions were limited to a few specific ingredients, such as titanium dioxide and photoinitiators. However, COVID-19 has impacted the entire supply chain.
Jeffrey Shaw, chief supply chain officer for Sun Chemical, said that the pandemic continues to contribute to significant disruptions in global supply chains as well as price volatility in almost all raw material categories.
“Additionally, most raw materials are on some form of formal or informal allocations,” Shaw noted. “Suppliers cannot build inventory to support the elevated demand being driven by many industries and remain in a make-and-ship mode. There is excessive pressure on propylene-based chemistries and worsening as propylene prices once again are pushing the $1/lb. threshold as they did after the Gulf storm this past winter.”
Arno de Groot, VP procurement, Flint Group Packaging, reported that all materials which require sea freight are seeing considerable delays.
“Additionally, we are experiencing delays with several material groups, including ethyl acetetage (ETAC), acrylics and polyamides, and in the energy curable arena, delays with trimethylolpropane ethoxylate (TMPEOTA), epoxies, titanium dioxide (TiO2). In packaging, there are delays with nitrocellulose and silicone-based additives. As such, these are the products which remain most concerning for us in terms of supply.”
John Hrdlick, president and CEO of INX International Ink Co., said that the supply chain has been dramatically impacted all year.
“As many raw material suppliers ran their stocks down at the end of 2020, we began 2021 with supply problems,” Hrdlick noted. “As a result of the Texas freeze and other events around the globe, we then experienced numerous force majeure declarations from our vendors impacting many of our product lines. At the same time – and even prior to this year – both land and ocean freight service companies were struggling.”
“As the COVID-19 pandemic continues, we are still facing major raw material concerns, including shortages of key materials and logistical issues,” said Klug. “Materials continue to arrive late or just in time due to supplier issues and labor shortages, which requires diligent planning to maintain our inventory levels.”
Supply Concerns
The question of what materials are causing the most serious concern would be lengthy. It might be easier to list the materials that aren’t a concern.
“Materials to support the energy curing business and other acrylate chemistries are extremely constrained and under price pressure due to feedstock escalation and shortages,” Shaw reported. “Also, many additives and specialty chemicals have become difficult to manage. Even though they are only 1-5 percent of a formula, not having sufficient supply is as detrimental as not having the high-volume raw materials available.
“Pigments, pigment intermediates, as well as all other key materials sourced from China, continue to be problematic as logistics channels remain constrained,” Shaw observed. “Container costs have risen as high as $30,000 per shipment. Container availability continues to be scarce. Alcohol-based solvents used in sanitizing applications may become an issue again if COVID resurgence intensifies this fall. Some solvents have become more available, but a few remain on allocation.”
“In terms of supply, the most concerning materials are monomers and oligomers for UV products, acrylates for water-based products, as well as steel drums and plastic packaging,” said Klug. “More specifically, we are facing concerns when sourcing TMP, TPG, HDO, GAA and epoxy. The availability of these materials remains tight with high demand throughout the industry.”
“A wide range of materials are involved and at the current time, the main reasons from our suppliers are related to the transportation delays,” Hrdlick noted.
Pricing Actions from Suppliers
These issues have led to higher prices from suppliers throughout the supply chain. Shaw reported that prices for most raw material categories have been escalating at unprecedented levels.
“The escalation has been driven by petrochemical feedstocks reaching historical record levels in some cases,” said Shaw. “Feedstock volatility, coupled with supply constraints and excessive logistics costs, have led to extreme pricing initiatives in many markets. In addition to petrochemical-based price increases, other markets are increasing at similar trajectories, such as titanium dioxide and nitrocellulose.
These markets are impacted by geographical supply disruptions and increased demand as well as global logistics challenges.”
“Price increases on most materials have been constant all year, and some items more than others,” Hrdlick said. “Packaging and freight cost increases have been very significant as well. In addition, some suppliers have cited increased labor costs and a shortage of manufacturing workers.”
“Nearly all suppliers have implemented price increases as a result of rising raw material costs, labor and logistics used for both inbound and outbound deliveries,” said Klug.
“We have experienced extensive pricing actions coming from our suppliers – including price increases,” said de Groot. “Furthermore, raw material pricing is extremely unstable and vendors are only able to provide quotes on a month by month basis or with placement of a purchase order. Because of the substantial increases in raw materials, packaging and transportation, suppliers are unable to negotiate on price.”
Logistics and Transportation Concerns
On top of key raw materials being in short supply, logistics and transportation issues are major challenges in terms of getting in supplies and shipping out products.
de Groot said that logistics and transportation issues “absolutely” remain a major challenge.
“Initially, this was particularly true with regard to sea freight; however, in the last months we have also seen a lack of truck drivers, which is causing delays in road transport and intermodal logistics have been affected due to increased congestion at rail terminals,” he added. “Various issues are contributing to these challenges, including labor shortages and natural disasters.”
Klug pointed out that logistical issues are a major hurdle both when sourcing materials and when shipping products out.
“When importing material, we’ve been seeing extended departure times due to availability of containers and space on the steamships,” said Klug. “When containers arrive at port it’s taking between several weeks to clear customs and locate carriers to deliver the containers. All indicators reflect that supply chain and logistics will continue to struggle for the rest of 2021 due to increased demand.”
Hrdlick pointed out that all levels of freight service have become unreliable.
“There have been significant delays due to the limited amount of shipping containers, delays in all the major ports, and a continuing shortage of drivers and trucks,” Hrdlick said. “At this point in time, these issues could very well continue throughout 2022 as there are no firm estimates of when it will be resolved.”
“Global transportation and logistics, including over-the-road carriers, ocean freight carriers, warehouse and distribution center providers are all constrained by equipment availability, drivers, and general labor shortages,” said Shaw. “All transcontinental activity is negatively impacted by delays and cost escalation. Port congestion has generated significant delivery delays as containers are not able to be released in a timely manner. Frequent communication, data sharing, and lead time management remain critical in order for our fully integrated supply chain to be effective to meet customer demand.”
“Communication internally and externally is absolutely critical,” Hrdlick added. “Everyone we speak with understands the situation, although it is extremely frustrating for all involved since business is very strong.”
“We are actively working with key suppliers on a weekly basis to manage the forecasted demand and delivery of key materials,” said Krug. “A constant and open line of communication throughout the supply chain has helped us through these challenging times.”
“We have found that it is critical to employ transparent and open communication between our customer base and our raw material vendors,” de Groot added. “Open discussions between all players in the packaging value and supply chain has been critical and we do not see this as something that would change in the future.”
Shaw noted that Sun Chemical’s expanded raw material supply portfolio and global manufacturing footprint supports all essential businesses and these areas of focus require the company to work closely with customers and suppliers.
“Communication of our requirements to suppliers has been intensified to an even greater level of frequency to ensure our demand plan is understood,” Shaw added. “Discussions are more supply chain strategy driven rather than task-oriented order and inventory reviews. We have also been working closely with our customers to understand their anticipated demand plan along with the changing dynamics of the industry and of end use customers. Communication throughout the supply chain is paramount to ensure an uninterrupted supply of incoming raw materials and finished product to our customers.”
“What our industry is experiencing is unprecedented in that the situation has lasted as long as it has, and when it will return to some level of normalcy is not very clear,” Hrdlick noted. “It appears the supply chain next year may improve at the end of Q1 or into Q2. However, the transportation issues could continue much longer into 2022.”
“Unfortunately, these supply chain and material challenges do not appear to be stabilizing any time soon,” de Groot observed. “It is no secret that our industry – and many others – are experiencing the most unprecedented raw material and freight availability, and cost escalation in recent memory. Business models need to support ease of transacting, collaborating and finding solutions to ensure continuity in the essential packaging market space. However, the packaging industry remains strong and resilient and is critical for our societies to run smoothly and ensure the well-being of people around the world.”
Because of this, there have been numerous announcements of price increases from ink companies. In the last six months alone, Sun Chemical, hubergroup, EFI, Doneck Network and Central Ink announced price increases, while Flint Group recently warned of significant price and supply pressures.
“The satisfaction of our customers is our top priority,” said Heiner Klokkers, CEO of hubergroup, in announcing the increases. “To ensure that we can continue to offer them high-quality printing inks and raw materials in the future, it is unfortunately essential in the current situation that we reflect the significantly increased procurement costs in the prices of our products.”
“We have seen force majeure scenarios in a number of sectors and suppliers only willing to guarantee fixed proportions of their capacity,” added Vijay Patel, global supply chain director - Flint CPS, in a release discussing the concerns that ink companies are facing. “Global logistics, crude and supply constraints and cost increases have all resulted in costs being passed throughout the supply chain. We are anticipating the disruption and cost impacts to continue to at least the end of the year with further price increases to follow as a result.”
These pressures aren’t just limited to inks. Key pigment, resin and solvent suppliers have announced higher prices.
“Issues between supply chain and logistics throughout 2021 have created the ‘perfect storm,’ which has impacted every business,” Ken Klug, Wikoff Color’s purchasing director, observed.
The Present Situation
Raw material concerns have been ongoing for the last few years, predating the COVID-19 pandemic. Typically, these disruptions were limited to a few specific ingredients, such as titanium dioxide and photoinitiators. However, COVID-19 has impacted the entire supply chain.
Jeffrey Shaw, chief supply chain officer for Sun Chemical, said that the pandemic continues to contribute to significant disruptions in global supply chains as well as price volatility in almost all raw material categories.
“Additionally, most raw materials are on some form of formal or informal allocations,” Shaw noted. “Suppliers cannot build inventory to support the elevated demand being driven by many industries and remain in a make-and-ship mode. There is excessive pressure on propylene-based chemistries and worsening as propylene prices once again are pushing the $1/lb. threshold as they did after the Gulf storm this past winter.”
Arno de Groot, VP procurement, Flint Group Packaging, reported that all materials which require sea freight are seeing considerable delays.
“Additionally, we are experiencing delays with several material groups, including ethyl acetetage (ETAC), acrylics and polyamides, and in the energy curable arena, delays with trimethylolpropane ethoxylate (TMPEOTA), epoxies, titanium dioxide (TiO2). In packaging, there are delays with nitrocellulose and silicone-based additives. As such, these are the products which remain most concerning for us in terms of supply.”
John Hrdlick, president and CEO of INX International Ink Co., said that the supply chain has been dramatically impacted all year.
“As many raw material suppliers ran their stocks down at the end of 2020, we began 2021 with supply problems,” Hrdlick noted. “As a result of the Texas freeze and other events around the globe, we then experienced numerous force majeure declarations from our vendors impacting many of our product lines. At the same time – and even prior to this year – both land and ocean freight service companies were struggling.”
“As the COVID-19 pandemic continues, we are still facing major raw material concerns, including shortages of key materials and logistical issues,” said Klug. “Materials continue to arrive late or just in time due to supplier issues and labor shortages, which requires diligent planning to maintain our inventory levels.”
Supply Concerns
The question of what materials are causing the most serious concern would be lengthy. It might be easier to list the materials that aren’t a concern.
“Materials to support the energy curing business and other acrylate chemistries are extremely constrained and under price pressure due to feedstock escalation and shortages,” Shaw reported. “Also, many additives and specialty chemicals have become difficult to manage. Even though they are only 1-5 percent of a formula, not having sufficient supply is as detrimental as not having the high-volume raw materials available.
“Pigments, pigment intermediates, as well as all other key materials sourced from China, continue to be problematic as logistics channels remain constrained,” Shaw observed. “Container costs have risen as high as $30,000 per shipment. Container availability continues to be scarce. Alcohol-based solvents used in sanitizing applications may become an issue again if COVID resurgence intensifies this fall. Some solvents have become more available, but a few remain on allocation.”
“In terms of supply, the most concerning materials are monomers and oligomers for UV products, acrylates for water-based products, as well as steel drums and plastic packaging,” said Klug. “More specifically, we are facing concerns when sourcing TMP, TPG, HDO, GAA and epoxy. The availability of these materials remains tight with high demand throughout the industry.”
“A wide range of materials are involved and at the current time, the main reasons from our suppliers are related to the transportation delays,” Hrdlick noted.
Pricing Actions from Suppliers
These issues have led to higher prices from suppliers throughout the supply chain. Shaw reported that prices for most raw material categories have been escalating at unprecedented levels.
“The escalation has been driven by petrochemical feedstocks reaching historical record levels in some cases,” said Shaw. “Feedstock volatility, coupled with supply constraints and excessive logistics costs, have led to extreme pricing initiatives in many markets. In addition to petrochemical-based price increases, other markets are increasing at similar trajectories, such as titanium dioxide and nitrocellulose.
These markets are impacted by geographical supply disruptions and increased demand as well as global logistics challenges.”
“Price increases on most materials have been constant all year, and some items more than others,” Hrdlick said. “Packaging and freight cost increases have been very significant as well. In addition, some suppliers have cited increased labor costs and a shortage of manufacturing workers.”
“Nearly all suppliers have implemented price increases as a result of rising raw material costs, labor and logistics used for both inbound and outbound deliveries,” said Klug.
“We have experienced extensive pricing actions coming from our suppliers – including price increases,” said de Groot. “Furthermore, raw material pricing is extremely unstable and vendors are only able to provide quotes on a month by month basis or with placement of a purchase order. Because of the substantial increases in raw materials, packaging and transportation, suppliers are unable to negotiate on price.”
Logistics and Transportation Concerns
On top of key raw materials being in short supply, logistics and transportation issues are major challenges in terms of getting in supplies and shipping out products.
de Groot said that logistics and transportation issues “absolutely” remain a major challenge.
“Initially, this was particularly true with regard to sea freight; however, in the last months we have also seen a lack of truck drivers, which is causing delays in road transport and intermodal logistics have been affected due to increased congestion at rail terminals,” he added. “Various issues are contributing to these challenges, including labor shortages and natural disasters.”
Klug pointed out that logistical issues are a major hurdle both when sourcing materials and when shipping products out.
“When importing material, we’ve been seeing extended departure times due to availability of containers and space on the steamships,” said Klug. “When containers arrive at port it’s taking between several weeks to clear customs and locate carriers to deliver the containers. All indicators reflect that supply chain and logistics will continue to struggle for the rest of 2021 due to increased demand.”
Hrdlick pointed out that all levels of freight service have become unreliable.
“There have been significant delays due to the limited amount of shipping containers, delays in all the major ports, and a continuing shortage of drivers and trucks,” Hrdlick said. “At this point in time, these issues could very well continue throughout 2022 as there are no firm estimates of when it will be resolved.”
“Global transportation and logistics, including over-the-road carriers, ocean freight carriers, warehouse and distribution center providers are all constrained by equipment availability, drivers, and general labor shortages,” said Shaw. “All transcontinental activity is negatively impacted by delays and cost escalation. Port congestion has generated significant delivery delays as containers are not able to be released in a timely manner. Frequent communication, data sharing, and lead time management remain critical in order for our fully integrated supply chain to be effective to meet customer demand.”
“Communication internally and externally is absolutely critical,” Hrdlick added. “Everyone we speak with understands the situation, although it is extremely frustrating for all involved since business is very strong.”
“We are actively working with key suppliers on a weekly basis to manage the forecasted demand and delivery of key materials,” said Krug. “A constant and open line of communication throughout the supply chain has helped us through these challenging times.”
“We have found that it is critical to employ transparent and open communication between our customer base and our raw material vendors,” de Groot added. “Open discussions between all players in the packaging value and supply chain has been critical and we do not see this as something that would change in the future.”
Shaw noted that Sun Chemical’s expanded raw material supply portfolio and global manufacturing footprint supports all essential businesses and these areas of focus require the company to work closely with customers and suppliers.
“Communication of our requirements to suppliers has been intensified to an even greater level of frequency to ensure our demand plan is understood,” Shaw added. “Discussions are more supply chain strategy driven rather than task-oriented order and inventory reviews. We have also been working closely with our customers to understand their anticipated demand plan along with the changing dynamics of the industry and of end use customers. Communication throughout the supply chain is paramount to ensure an uninterrupted supply of incoming raw materials and finished product to our customers.”
“What our industry is experiencing is unprecedented in that the situation has lasted as long as it has, and when it will return to some level of normalcy is not very clear,” Hrdlick noted. “It appears the supply chain next year may improve at the end of Q1 or into Q2. However, the transportation issues could continue much longer into 2022.”
“Unfortunately, these supply chain and material challenges do not appear to be stabilizing any time soon,” de Groot observed. “It is no secret that our industry – and many others – are experiencing the most unprecedented raw material and freight availability, and cost escalation in recent memory. Business models need to support ease of transacting, collaborating and finding solutions to ensure continuity in the essential packaging market space. However, the packaging industry remains strong and resilient and is critical for our societies to run smoothly and ensure the well-being of people around the world.”
