With independent researchers (IBISWorld) predicting the price of wood pulp will rise by 5.1% year-on-year, it’s no surprise that we’re seeing resultant cost increases in the areas of Paper and Packaging. Office paper and uncut paper for professional printing have both been on the rise and there has been a knock-on effect to cardboard packaging, where Test Paper and Kraft paper have jumped 11% and 16% respectively since January.
The industry moves quickly as new technology and legislation drives competition and innovation. Annual increases to wholesale prices continue to have an impact and there are increases to call charges and call setup charges, with network providers clawing back losses from the loss of 0800 and roaming charges. Caps are being removed from business accounts, so the future looks expensive.
Price increases from 3.49% to as much as 20% were being passed on – and regularly successfully challenged – in the immediate aftermath of the Brexit vote. That could look like opportunism in an area where we often achieve significant improvements in terms of both infrastructure and value. Increases to paper prices from Office Supplies companies have also been in the range of 4-10%.
With landfill tax now linked to RPI, the pain of April 1st price increases has dissipated somewhat. The export of Refuse Derived Fuel in recent years has helped to reduce the cost of waste disposal for UK organisations. The 16% collapse of sterling and a surplus of capacity in export markets have also increased in input costs and increases to staff costs and fuel have all served to drive prices higher.
We’ve seen price increase letters from DHL, UPS, FedEx and TNT in Distribution and in Logistics and International Freight, carriers are under pressure. The market has seen unprecedented alliances built between major players as capacity shortages and significant price hikes affect the UK export market, particularly in the low value waste, which have affected the inbound market for a while.
Fleet costs are also on the rise as the government introduces a new company car tax scheme that is confused at best and counter-productive at worst. This complicated landscape just got more difficult to navigate. Organisations will need to review their policy on car versus cash alternatives and how they may need amending now and in the future.
There will also be increased cost in energy prices in the years ahead. A shortage of supply, capacity market auctions and a ten year wait for nuclear to come on-stream all contribute to higher energy prices for UK based organisations, compared to competitors overseas. The Office for Budget Responsibility also warns that Levy Control Framework costs are set to rise year-on-year to 2021.
The UN’s global food prices index has shown a 10% overall increase since May 2016 and challenging harvests in Europe of potatoes and salad crops have been partly responsible. There is increased cost and demand for international shipping, rises in the prices of edible oils and devastating losses of fish stocks in Norway and Chile. The impact of the devaluation of Sterling has been felt most in the UK and food inflation looks set to continue.
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