Despite tense situation with confidence into the new year

In addition, costs are rising at the various levels and the pandemic continues to harbour uncertainties. Against this background, the Gemeinschaft Papiersackindustrie e.V. (GemPSI) has published a special edition of the industry barometer at short notice. The mood of the German paper sack industry creates transparency with regard to current developments in the industry and provides a forecast for 2022 - which is quite positive despite many imponderables.

German paper sack manufacturers report a very tense business situation at the end of 2021. They blame this in particular on the shortage of important raw and auxiliary materials for paper sack production, as well as extreme cost increases. "Our customers are feeling this primarily through longer delivery times and cost increases," explains GemPSI Chairman Alfred Rockenfeller. "And this is despite the fact that we are often unable to pass on cost adjustments to them to an economically sufficient extent. In addition, due to the shortage of raw materials, we cannot respond to their orders as flexibly as usual."

Supply of raw and auxiliary materials stagnates
GemPSI members are experiencing supply bottlenecks with many important raw and auxiliary materials and requirements. Sufficient to very poor - this is how the majority of GemPSI members classify their supply situation with sack kraft paper. Packaging materials, especially wooden pallets, are also in short supply. Here they rate their supply situation in equal parts satisfactory, sufficient and even very poor. The situation with freight is also critical. Around two thirds of the GemPSI members only indicate sufficient supply, with the remaining answers equally divided between good and satisfactory.

The be-all and end-all: plan ahead
The bottlenecks lead to longer delivery times and an allocation of raw material quantities on the part of the suppliers. The quantity quotas are hard negotiated between the paper sack manufacturers and raw material suppliers. Short-term change requests from paper sack customers often cannot be taken into account due to a lack of leeway. German paper sack manufacturers therefore recommend that their customers plan their annual requirements with foresight in order to be able to guarantee them the highest possible security of supply in the coming year.

Cost increases in all areas

The German paper sack market is affected by massive cost increases. In almost all areas of the paper sack production chain, purchase prices have increased since the beginning of the year. For sack kraft paper, GemPSI members report an average increase in their purchase prices of 23% (white) and 46% (brown), and for plastic films even 62% more. The costs for energy (on average plus about 120 %) and packaging material have shot up particularly. According to their data, pallets and lids have become 160 % more expensive on average and up to 275 % more expensive at the most compared to the beginning of the year, other packaging materials even by more than four times. The rising raw material, energy, packaging and transport costs are putting a lot of pressure on the paper sack market, according to GemPSI members. They are counting on planning support from their customers - and are working hard to reward this with manufacturing capacity.

With confidence into the new year
Despite the tense market situation, GemPSI members are confident about 2022 and rate their overall business outlook at 2.73 - between good and satisfactory. In their view, the signs point to healthy growth in the overall market. In terms of delivery times, German paper sack manufacturers expect a further increase next year, as they assume that paper and film will remain in short supply. Furthermore, they assume that the costs for raw and auxiliary materials will also continue to rise. They expect particularly high adjustments in the costs for sack kraft paper and energy. For the other cost factors they rather expect slight increases. In order to be able to plan and act with foresight, they maintain intensive contact with their suppliers.

Pandemic development causes uncertainty
According to German paper sack manufacturers, the current pandemic development continues to create uncertainties for their business activities, for example due to a lack of international transport and freight space as well as disruptions in supply chains. Nevertheless, they see themselves well positioned for the coming year. "As difficult as the situation seems to be right now, it can definitely be mastered with foresight and common sense. Together with our customers and suppliers, we will develop solutions that will contribute to easing the situation in the long term," Alfred Rockenfeller is confident.