|Lead time delays||2-3 weeks||2-3 weeks|
|Unit cost changes||10-15%||10-15%|
You’ve no doubt heard about the coronavirus (COVID-19) outbreak in China, specifically the Hubei province. While there are no factories in the Lumi network within the Hubei province, the outbreak could soon prompt factory shutdowns in neighboring provinces that may cause delays.
As of this writing, no lead times have been affected by the outbreak, but should shutdowns continue, you may see delays in order lead times, preproduction sample lead times, and quoting from factories in the these areas.
Before the outbreak, we forecasted shutdowns for Lunar New Year throughout early February. We are keeping in close contact with manufacturers in China and will update you should shutdowns be extended past those dates.
An increase from the 25% tariffs implemented on May 10, 2019 to 30% has been delayed several times, and was suspended today. This tariff increase would affect the majority of packaging products shipped from China, including plastic bags, cotton bags and corrugated boxes.
The previously announced tariffs scheduled for September 1, 2019 have been increased from 10% to 15%. The affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books). These products have strong coverage across the Lumi Network, if you need help moving production to navigate these tariffs please reach out to your Lumi team.
A new 10% tariff is due to take effect on September 1, 2019. The list of affected products has been updated on August 13th by the USTR. As of this writing, the affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books).
The tariff increase of 25% has officially gone into effect today.
Products which were impacted by the 10% increase last year will be increased by an additional 15%, and new products impacted by the tariffs will increase by the full 25%.
Any products that are in production or in transit but have not passed through US customs will be affected. If you are a Lumi customer with current orders affected by the increased tariff rate you will see the tariff as a separate line item on your invoice.
Despite the 25% tariff, our market analysis indicates that the majority of plastic packaging is still more cost effective imported from China, however if you are interested in evaluating other options, request a quote.
With recent news of the tariff delays with China, we have delayed the 25% increase on China-sourced Lumi products until the increase goes into effect. Our prices now reflect the most recent tariff increase of 10% from September 2018. When it does, we'll update this post to reflect the change.
If you ordered at the previously increased tariff rate, how does this impact you? For products imported from China after November 1, 2018, Lumi will refund the 15% tariff difference after your products arrive in the U.S., assuming that the tariff increase doesn’t go into effect before then.
Over the past several months, you’ve probably heard the news about increasing tariffs on Chinese goods. Since August, nearly 6,000 line items in the Harmonized Tariff Schedule (HTS) were hit with a 25% tariff increase, going into effect on January 1, 2019.
In the third round of tariffs on September 24, 2018, nearly every type of packaging and packaging material made the list.
How the tariffs will impact Lumi pricing
Starting today, we will increase baseline pricing by 25% for the following products to account for the increase in tariffs. This tariff increase will only affect items in your Dashboard if they are made in China.
Why are we applying the tariff increase today if it takes effect on January 1st? With current lead times for manufacturing and sea freight from China, products ordered today will be affected by the tariff increase by the time they enter the US. You can stay on top of the current supply chain status by viewing the Delivery Schedule.
Historically, we have sourced the majority of our flexible plastic packaging (poly mailers, poly bags, laminated pouches) from China because of their highly competitive pricing, matched with their high standards for construction and print quality. We’re working with our manufacturing partners in mainland China to mitigate the U.S. tariffs as much as possible and provide geographic alternatives when we can.
As always, we’ll keep you updated on any price fluctuations and the drivers behind them.
Paper mills announce linerboard pricing twice a year, typically from February through March and September through October. We post all updates to linerboard pricing on our Corrugated Price Tracker.
We expect linerboard pricing to increase by $50/ton at the end of March, and this will increase the price of corrugated boxes by end of April 2018. At a glance, here are the predominant factors that are driving the pricing increase:
Reasons cited by mills for this particular increase include freight costs, moderate demand growth, and mill capacity. Domestic freight costs are at an all time high and the highest they’ve been since 2015, according to data from the U.S. Bureau of Labor Statistics. Demand continues to moderately increase a few percentage points per year, driven largely by the ecommerce sector. Current mill capacity utilization is at 93%-98%, so any growth is strains demand. (For reference, full capacity is typically considered to be around 85%, since 100% volume renders a factory inoperable.)
These are the predominant factors for the increase, but there are certainly other factors at work here as well. Notable, significant acquisitions on both the mill and converting side over the past year, and export paper pricing is at a high point.