Paperlinx under fire for adding 1% fuel levy per drop

Paperlinx has been criticised by printers following its decision to instigate a fuel charge of 1% per drop across its UK operating companies, to combat rising oil prices.

The charges are the first time the merchant has imposed such a levy, which it said is an attempt to mitigate some of the impact of a 37% increase in the cost of diesel fuel.

It said it wants to be open with customers rather than "hide behind paper price increases".

However, some printers have criticised the move. Geoff Grindley, senior estimator at the Square Group, said: "I, like many others, feel we just have to accept a third increase this year."

Alex Greenman, sales director at Axis Printing in West Yorkshire, said: "Paper is the largest single component in the cost of producing virtually any job so the effect on our gross margins is considerable.

"Whether the merchants call it a fuel increase or a paper price increase is immaterial, the end result is the same."

The additional fuel charge issued by the merchants operating under parent Paperlinx, PaperCo, Robert Horne Group and Howard Smith Paper, is an increase of around £1.93 to the average delivery.

Paperlinx regional president Dave Allen defended the move saying the company simply cannot absorb these costs into the business.

"No-one could have predicted fuel prices to reach this level – which equates to an increase in our costs of £2m in the last 12 months.

"We will continue to monitor fuel pricing and hope that this measure is just a short-term initiative."

Dave Hodgson, managing director of Kelvin Print Group, said Allen's comments are understandable.

"If only printing companies could do the same thing," he said. "There is a great degree of sense that comes out of paper companies as they try to make sure their pricing policy allows them to still be in business tomorrow.

"We in the print sector should look more closely at how the paper companies achieve price increases."

Peter Ellis, Unite national officer, paper and board, said paper merchants are struggling because of fuel price increases.

"The impact of the increase in fuel prices is not new and everyone is suffering from an increase in fuel costs."

In June, the price of oil soared to almost $150 (£84) a barrel driven by concerns about supply and increased tensions in the Middle East. While it has now fallen by almost a third, it will take some time for the price of fuel to reflect the reduction.

Last month, Paperlinx increased the price of its paper by between six and 11% in the face of rising raw material and energy costs.

PaperCo, Robert Horne Group and Howard Smith Paper said they have had to cover the costs of continuing paper manufacturers' increases, which are up by 10%.