Geopolitical tensions in the Middle East and rising oil prices are putting pressure on the packaging materials market, with lead times for labels stretching to four or five weeks in some cases. Nino Venezia, founder of the Netherlands-based Dutch Graphic Group, says the situation is far from its peak.
"There is quite a lot happening in the market," Venezia explains. "We are seeing lead times for labels run to four or five weeks, and there are substantial price increases across the board. In my view, we are nowhere near the top yet. If the situation in the Middle East is not resolved quickly, I expect we will face another very difficult period in terms of pricing for self-adhesive materials. It is exactly the kind of situation we experienced during the COVID-19 pandemic. Hopefully it will be temporary, but I am concerned."
© Enzo Venezia
Dutch Graphic Group supplies labels and thermal rolls to the fresh produce sector. As a produce supplier, the company typically sees turnover increase significantly between March and October, and adjusts its stock levels accordingly. Venezia says that planning ahead has proven crucial.
"Each year we build up our summer stock in February and March, because as a fresh produce supplier we handle many times more volume from spring through autumn than in winter," he says. "Because we work from our own inventory rather than placing customer-specific orders with suppliers, we are currently well stocked. An added benefit was that our largest customer extended their agreement with us for three years, which led me to increase our polypropylene stock significantly to ensure we could keep supplying them on time."
As a result, Dutch Graphic Group has been able to maintain delivery times of around two weeks, at a time when some competitors are quoting four to six weeks. New customer enquiries have increased noticeably.
"In just one week, we received calls from several new customers who were being told to wait four to six weeks by their current supplier," Venezia says. "We have even delivered to some of them within three days. Pre-ordering remains a challenge in the fresh produce sector." He adds with a laugh: "That is just the nature of the industry."
The company is not immune to the price increases, however. "We are, of course, also facing higher costs," Venezia acknowledges. "But this situation once again shows that holding stock is the best advice we can offer. We are glad to be firing on all cylinders for the Dutch season."
He also points to a more personal dimension. "In the evening, I received a photo from Gino, one of the two owners, who was in the warehouse with his right-hand man Jip, printing and winding, with the message: 'Back for a few days to where it all began for the two of us, in the hall.' That is the upside of a situation like this: it reminds us as a company that we are here for our customers. And if that means the office staff put in extra hours at the press, then so be it."
© Dutch graphic groupFor more information:
Dutch graphic group
Venrayseweg 130A
Industrieterrein Venlo 3851
+31 (0)77 399 96 40
[email protected]
www.dutchgraphicgroup.com
