Instability in the packaging and label market
"May you live in interesting times" this old Chinese proverb which in recent times has become a curse. We actually live and work in extremely stressful period. Many of you have already noticed that the lead times have been extended due the global market situation. This problem affects many branches of global industry. Unfortunately, it also has directly affected our industry. At Prespack, we provide comprehensive professional services for pharmacy. The scope of our activities is mostly focused on repackaging and assembling medical kits or labelling. Problems with the availability of raw materials cause longer lead times, as we have to wait for the components necessary to complete the entire order.
Let's start from the beginning. 2020 began with an extraordinary and unprecedented situation. SARS-CoV-2 had been discovered and instantly had a major influence on our lives. At first, we didn't know the threat, a lot of people here were horrified. The influx of negative information forced us to isolate ourselves in order to protect our life and health. Each of us realized that the pandemic will have a massive impact on the global economic situation. The far-reaching restrictions have been introduced. The growing number of cases and hospitalized people heralded the collapse of some industrial branches. We had to learn a different system of work. However, this "new normality", which initially was a very big challenge, has gradually become part of the day-to-day operations of our company.
During the months of global pandemic we were forced to function in a new way. We truly believe that we have overcome many of those obstacles. Unfortunately, 2021 brought even more difficult challenges. This applies mainly to the collapse of the supply chain and thus the increase in the prices of raw materials and services. We hoped for stabilisation of the situation.
However, it isn’t. We are observing a constant increase in the prices of raw materials, including paper, varnishes, ink for serialization machines, as well as increases in labour, transport, energy and waste processing costs. We constantly make everything to minimize the negative effects of this situation, which may affect our customers. It is time of increased mobilization and collaboration with our clients. Our suppliers can be assured of our commitment and support.
We hoped that everything would return to normal soon. The beginning of 2022 again surprised us with negative events. In January, a general strike began at UPM's factories in Finland. As you probably know, it is one of the largest suppliers of label materials in Europe. The strike quickly affected other manufacturers of self-adhesive materials, and as a result of that event, it caused instability on the market of paper, PP and PE film. Experts from all over the world were shocked, because such situation has never happened in history! Currently, delays are given in the range of 10-12 weeks, with no confirmation of delivery within that time. In February, Russia's invasion of Ukraine began, causing further repercussions for the market. These events, plus previous problems related to rising prices and the lack of some deliveries, caused the snowball effect.
We do everything to protect our customers from the effects of turmoil of the industrial market. Therefore, please take into account longer lead times and order in advance so that we can prepare the necessary components. The services we provide are highly specialized. We know how the exemplary cooperation is important for our business partners. We hope that the situation will return to normal soon. Unfortunately, we don't know when this will happen. During this time, we must show mutual understanding. We will survive this difficult time together.