Now in Direct Mail: Navigating New Paper and Printing Challenges

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In a time of postal delays, paper shortages, and supply chain disruptions, CCAH is helping organizations rise to unprecedented challenges in print and direct mail production.

If you’re looking at an eight-month lead time for envelopes and wondering how to plan now for November mailings, you’re not alone. Direct marketers face new challenges in getting direct mail out the door—from postage increases and rising paper costs to labor shortages and shipping delays.

But direct mail is a major (and often primary) source of revenue for many organizations. Few organizations can afford to scale back direct mail programs or cut campaigns. Not to mention, many folks who comprise your direct mail audiences might not have access to computers or mobile devices; they rely on the mail to stay connected to the issues they care about.

The good news is that there are ways to navigate the new landscape, and we are here to help you through it. 

Shannon Murphy, Principal and Senior Vice President of Production

A Closer Look

According to the Bureau of Labor, over 4 million people voluntary quit their jobs in the month of January. An additional 3.6 million people called in sick from work that same month due to COVID-19 and other factors. On top of that, many people who spent their careers working in print are retiring from the printing trade, and so far, fewer workers in younger generations are stepping in to fill these roles. Like many sectors, print production is contending with a reduction in the workforce.

In addition to labor shortages, COVID-19 impacted paper supply and demand. In 2020, paper production was reduced by 40%, and many paper mills converted their lines to produce other materials. In 2021, demand for paper increased but mills couldn’t keep up. They weren’t and still aren’t able to import as much paper because of mill closures and logistical challenges, including trucking shortages, container shortages, increased dock time, and railway bottlenecks.

Some mills are completely sold out of certain types of paper, and mills are allocating paper to printers based on historical purchasing to prevent stockpiling. These factors have resulted in increased costs and lead time.

Because of the increased demand for paper that is expected through 2022 and into 2023, prices will continue to increase. Mills will consolidate offerings, and some brands will be discontinued. A worker strike in Finland at UPM, one of the world’s leading producers of label stock, began at the start of the year and is lasting through March, further impacting the paper industry.

Meanwhile, postage rates continue to rise, with the next rate increase set to take place on July 10, 2022.  At that time, rates are projected to increase by as much as 9% – 9.5%. Starting in January 2023, the US Postal Service has planned for two postage rate increases per year.

“However long the day, the evening will come – bad times don’t last forever.” – Irish proverb

Adapt and Overcome

CCAH is fortunate to work with suppliers who are going above and beyond to accommodate our clients’ needs in this challenging environment. While there are no easy or immediate solutions, there are steps you can take to stay in the mail and get your message in front of your donors.

At CCAH, we work with our clients to apply for USPS promotions to cut costs, leveraging USPS Gateway as a savings tool. We gang print for multiple campaigns, across programs and across clients. We also track mail for our clients to stay on top of delivery times and ensure mail pieces are delivered. And we implement innovative production techniques to offset cost increases and decrease production time. Here are additional steps we are taking that everyone can consider:

    • Choose the appropriate class of mail for your campaign. Build time into your plans so you don’t need to mail as much first class.
    • Keep mailing lists clean using NCOA and ACS, and purge undeliverable addresses from your lists.
    • Sign up for USPS Promotions. For Example, Informed Delivery will take 4% off your postage costs for the last five months of 2022. It has the added benefits of being free, potentially boosting response, and keeping your organization as visible as your competitors.
    • Be open to alternative paper stocks and different formats, which allow for flexibility in sourcing.
    • Stay away from print flat & convert envelopes, which take more time to produce.
    • Think about the BRE – how essential are white mail codes? The answer might be different for everyone, but it’s important to ask the question.
    • Is SRE postage warranted?
    • Tint paper to match a color. Color stocks are becoming harder to come by.

Ultimately, the best thing you can do now to ensure a successful year-end is  plan ahead and stay flexible. Don’t just have a Plan A. Have Plans B and C too. Already, many envelope suppliers are booked through August. So, start strategizing for your fall campaigns early, order paper now, and book press time. Come autumn, you’ll be happy you did!

And if you have any questions, please leave a comment below or send me an email at smurphy@ccah.com.

Print Industry: Important Update

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Plan Ahead – Way Ahead!

Envelope lead times can take up to 12 weeks. These lead times are the longest I’ve seen in the 20+ years I’ve been in the industry. Causing these delays are several factors:

    • Paper Shortages
    • Staffing Shortages across the supplier network
    • Transportation Delays

Paper Shortages & Cost Increases

Shannon Murphy, Principal and Senior Vice President of Production

Many paper mills have announced they are on allocation. This means they have limited tons available to produce/sell each month, and they are going to prioritize those tons to key customers/printers/end‐users. Each mill has different amounts of paper allocated to their key accounts. These allocation tons are determined by past customer history and are monitored and adjusted monthly as orders are placed and accepted into the mill runs. In addition, we have seen delays from multiple mills as they fall behind with their schedule. We expect similar market conditions to continue the balance of the year and well into 2022 or even early 2023.

Due to the allocated paper market, mills have been slow to confirm paper orders, but placing orders early will help the mill when determining allocation. Once paper is ordered you own it.

Some companies are not able to get recycled stock. This could be a problem for many environmental non‐profit organizations. In the past two weeks, a supplier told me that due to allocation he can’t order recycled paper until February.

Labor Shortages and major disruptions in the supply chain, made worse by the pandemic, have caused delays in print. Some paper manufacturers have scaled back their shifts due to the delta variant. Many have shifted to producing packaging materials due to the increase in online order shipping with the onset of COVID‐19.

Paper costs have increased 14% over the last year due to the increase in wood pulp. Wood pulp has increased over 50% in the last year. And paper increases aren’t over as several paper manufacturers have announced additional increases in the past few weeks.

Staffing Shortages

According to a recent study by Booz Allen, the number one business concern in the print industry is finding skilled workers. Because of this shortage 6/10 production jobs go unfilled. Not only is this affecting press operators, ink technicians, and prepress workers, it’s also affecting the trucking industry.

Suppliers are running at 75% capacity simply because they don’t have the staff to run equipment.

Other factors are playing into the staffing shortage:

    • Continued COVID Cases
    • Quarantine Requirements
    • Lack of childcare
    • Extended Unemployment Benefits
    • Pandemic having prompted workers to move to other industries
    • Retirement of the baby boomer generation

Transportation Delays

    • Nationwide truck driver shortage translates to only one driver available for every eight truckloads that are ready for delivery.
    • Lack of drivers and workers cause port back ups for shipments coming in from overseas.
  • Any one of these issues would cause delays, but the combination of these issues results in longer lead times and an increase in cost over last year for the same service.

CCAH Recommendations

    • Plan Ahead – schedules will be longer for the foreseeable future
    • Deliver Art on Schedule – flexibility in due dates is a thing of the past. Art delivered behind schedule doesn’t mean a “day for a day” anymore … a one‐day delay can translate to several weeks delay in the print schedule
    • Order Ahead – print for multiple campaigns at a time
    • Time Savers – print letter head and envelopes early; duplex laser to allow more lead time with copy; inkjet teasers instead of printing on envelopes
    • Be Flexible on Paper Stock (if you can) – can you tint white stock instead of using color paper or use a different paper weight?
    • Communicate. Communicate. Communicate.

There is some uncertainty still, but it looks like we will continue to have print industry challenges into 2022 and 2023. Please plan ahead. And if you have any questions, please leave a comment below or send me an email at smurphy@ccah.com.

Paper Availability — Going From Bad to Worse

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Paper is increasing in cost again!  And the timing to get paper is becoming longer and longer.

Custom stock and roll sizes can take several weeks to source as mills are running into the same issues as many other businesses: getting folks to come to work, fill equipment to run, and keep up with the demand.

The latest word is that by July 1, paper will see an increase of $4.00cwt (that’s $4 per 100lbs).

This would be an increase of 8% — an unprecedented increase. When a Mailshop gives an estimate of how much a job will cost your organization, paper typically represents 50%-60% of a quoted price. The remaining cost goes to labor, overhead, delivery, ink, folding, etc.

That means that with an 8% increase in paper, your quoted price for envelopes, letters, etc. will be about 5% higher than expected.  cwt

Shannon Murphy, Principal and Senior Vice President of Production

The Next Step

The dreaded word, allocation.

For those not familiar with how this one works, it basically looks like this:

Mills can’t meet demand. So they allocate inventory to printers and converters based on how much they buy and how much they have used over the last year.

Example

Let’s say company “A” bought $10,000 worth of paper in the past year. When put on allocation, they can only buy:

      1. The same as last year
      2. 90% of what they bought last year, etc.

The percentage they get will be based on supply.

The scary part is some printers could struggle to get paper. This is where suppliers’ strong relationships with paper manufacturers or merchants will play a key role in getting paper when needed.

How does this affect you? 

Factor in more time for projects. Getting paper will take longer, and of course with these announced price increases, it will cost more.

How Can CCAH Help?

    • We are starting early — making decisions on packages sooner so production can order paper before the art is released.
    • We’re talking with our production managers directly, asking about specialty stocks far in advance of wanting to use them.  We’re thinking about places we may have flexibility with the paper stocks we are using.
    • We’re being thoughtful on where strategy can change and where we won’t have wiggle room. Making major changes to package specifications midway through a job may spell big problems — if we have already ordered a special paper and the paper specs change — that original paper is still yours … the good news is you would have it available for your next mailing, or you could sell it to another supplier client if the need arose.

There is some uncertainty still, but it looks like the fall will be very similar to last year with paper challenges. Please plan ahead. And if you have any questions, please leave a comment below or send me an email at smurphy@ccah.com.