One of the most overused terms in 2020 was “unprecedented”. Unfortunately, that term may be the most appropriate way to describe current market conditions in the industrial paper bag market.
Unprecedented raw material shortages combined with strong demand are leading to skyrocketing prices and significantly extended lead times. The second half of 2021 is expected to be a very challenging time for bag manufacturers, distributors, and end-users.
What factors are contributing to supply chain disruptions and cost increases? The following information is intended to highlight the issues affecting lead times and pricing in the multi-wall paper bag market.
Extended Lead Times for Multi-Wall Paper Bags
Under normal conditions, lead times for domestically produced multi-wall paper bags range from 6-12 weeks. Import bag lead times typically range from 14-18 weeks.
However, current lead times for domestically produced bags are now 14-22 weeks. In some cases, lead times are as high as 26 weeks. Import bag lead times are less impacted and remain around 16-18 weeks. It is important to note that lead times vary based on bag type and bag construction.
Factors contributing to extended lead times include:
Sack Kraft Paper shortages
Limited Labor availability
Equipment maintenance and repair delays
Bag users should take precautions and plan accordingly. Anticipate delays on current orders and consider placing new orders 4-6 months in advance. Southern Packaging is currently increasing stock inventories and putting additional plain emergency bags on the floor to support our customers during this time. *Note these issues affect the entire industry*
Prices have increased 10-25% on multi-wall paper bags and will continue to rise throughout 2021. These increases affect all North American bag manufacturers and their customers.
Additional Price increases coming in Summer 2021
Paper producers and sack kraft converters have announced additional increases beginning August 1st. This increase marks the 4th announced increase in 2021 (March 1st, May 1st, June 1st). Prices will increase by $50-70 per ton depending on paper type. At this time, we do not anticipate price relief in 2021. Bag prices will continue to climb, most likely in increments of 5-8%.
How do I avoid extended lead times on paper bags?
Southern Packaging stocks the largest inventory of on-demand multi-wall paper bags in the country. Nearly 3 million paper bags across 50 SKUs are available for immediate shipment to your plant location.
We offer vendor-managed inventory programs! We invite and encourage our customers to leverage our 400,000 sq. ft. warehouse facilities to store their packaging materials. Our vendor-managed inventory programs allow our customers to enjoy the benefits of having their packaging products when they need them, where they need them.