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USPS customers brace for the effects of the peak season’s higher volumes on delivery performance. Paper is in short supply for all printing grades. Transportation rates have stabilized, though at a very high point.
Quad is a significant mailing industry partner, printer and transportation services provider — we’re uniquely positioned to provide accurate information on topics related to postal, paper and logistics. Our goal is to provide clarity and share best practices so our clients can more confidently address the latest developments.
These are especially challenging times for our industry. Contact your Quad representative if you have any questions or concerns — they’ll ask our in-house experts to investigate and provide answers to all.
Here are key developments since our last update:
USPS delivery performance
The USPS continues to move mail fairly well this fall season — though volume has traditionally impacted their processing times by mid-October, and certainly by the last week of the month. We’ve seen some delayed facilities over the past few weeks. Expect that list to grow and for delays to be longer as volumes increase throughout November.
First Class mail has moved well since the Service Standard changed on October 1 for Quad clients.
Although the USPS has moved mail better than usual so far this fall season, they are publicly claiming even stronger performance. It’s important to note that they only consider certain mail in their measurement. They don’t include much of the Flat mail and a good portion of Letter mail, as they require a ‘start-the clock’ and ‘final’ scan for a piece to be included. Nor do they provide ‘start’ scans on 5-10% of all mail, or ‘final’ scans for up to 40% of Flat mail. Also note that their reporting on First Class mail is relative to their new, longer Service Standards, which took effect October 1.
Supply chain challenges and logistics challenges are impacting our ability to deliver mail to the USPS as scheduled. We continue to do everything commercially reasonable to meet our clients’ targets, but anticipate some will be impacted due to circumstances beyond our control.
USPS peak season webinars
On November 1, USPS Operations held its first virtual session to communicate peak season conditions related to processing, delivery, logistics and weather. Anyone who wants to keep up with the latest can register for the meetings, which occur at 1PM Eastern each Monday, Wednesday and Friday through the holiday season. Quad remains concerned that USPS Operations haven’t made the changes necessary to avoid a repeat of last year’s abysmal performance. We will continue to communicate relevant news via this update and through our client representatives.
Periodicals postage calculation changes
The USPS recently proposed a way to simplify how they manage pricing for Periodical pending titles. Quad ran preliminary studies based on multiple scenarios. We found the average percentile factor the USPS is proposing was for the most part higher than what one would normally pay. As such, these proposed changes could be a barrier to enter as a pending periodical.
While we agree that the new method proposed simplifies the periodical pending process, we cannot overlook the fact that these are ‘new’ rates — price changes that require appropriate vetting by the PRC.
PostCom sent a letter to the USPS expressing concern. It also states that periodicals postage calculation changes should not be implemented prior to the scheduled July 2022 price change, and in fact should be lower than the proposed percentile increase. We’ll share any news as the situation develops.
Congress continues to work on the appropriations bills and funding the government long term. Right now, all mailers can assist with advancing legislation to curb postage increases. The more Congress hears about troubling aspects of the USPS’s plan, the more likely they are to push hard for changes with the Postmaster General and the Board of Governors. Please consider taking a few minutes to fill out a short form on this page, which will automatically message your Members of Congress. Or you can text MAIL to 52886. The process is a simple, extremely effective and efficient way to let Congress know your thoughts and tell your story about how important an affordable USPS is to you.
The time is now to let Congress know that you support requiring the PRC to take another look at the rates and the improved financial position of the Postal Service. Congress can help our industry and the over 7 million jobs we support. The more Congress hears from those in our industry the more likely we will be successful in getting the PRC to review these new higher rates. If you do contact your representatives, please make sure Quad is aware of your support for this legislation.
Mail volume for the week ending October 23, compared to 2020
- Total Mail Volume: Down 4.6%
- Packages: Down 9.7%
- Single Piece: Down 13.3%
- Presort First Class: Down 1.3%
- Marketing Mail: Down 23%
- Periodicals: Up 14.1%
Paper Market Updates
Paper for all printing grades continues to be in short supply for the foreseeable future, as mills are claiming oversold order books well into 2022. Prices for all recovered paper grades have skyrocketed this year, curtailing availability and increasing the cost of recycled fiber for printing grades of paper.
See our previous update for a breakdown of factors affecting supply and pricing. Here’s the latest news from our industry:
- Coated freesheet and coated groundwood producers have announced a price increase for January 1, 2022
- Producers of supercalendered grades (SCAs and SCB) have announced a price increase for January 1, 2022
- Heinzel has announced closure of their 350,000-tonne Laakirchen SCA paper machine, and will convert this machine to produce containerboard by mid-2023
Logistics Network Update
Rates seem to have stabilized over the past month, though at a very high point. Capacity has still been available — but LTL delivery performance continues to be poor.
The US logistics network is still experiencing a stressed supply chain, especially in the LTL space where we continue to see delays of three days longer than the published transit times, and a larger number of mis-routed product by these Carriers. They’re encountering the same challenges as the rest of the US economy with reduced labor and inexperienced employees.
The truckload market is currently holding up but struggling to handle capacity with more demand than supply. Rates remain high, especially for product that is to be handled on weekends. Rail is also a continuing challenge, as it has been all year. The areas impacted change weekly, which makes it difficult to determine the best shipping method at any time.
We remain concerned that it will become more difficult to find capacity, and or rates will climb as peak season freight volumes increase. Your Quad representative will always work diligently to find you the lowest rates with the most efficient transportation available.