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Hurricane Ida has delayed USPS delivery on the Gulf Coast. The paper market is faced with challenges to create supply that meets growing demand. Labor shortages and capacity issues continue to affect rates in logistics.
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:
Mail Transport Equipment (MTE) shortages
USPS customers in the Midwest are currently challenged with very few available pallets for MTE. The Postal Service has postponed Quad’s previous orders for the time being, but we’re working directly with the USPS Logistics executive to address the issue. We don’t anticipate that this will have any negative effect on delivery of client mail to the Postal Service. We do have contingency plans, but hope to resolve the issue before that becomes necessary. Your Quad contacts will keep you informed, though this is a challenge that every commercial postal customer in the region is experiencing.
Ida made landfall on Sunday, August 29 as a Category 4 storm near New Orleans, causing massive flooding and wind damage. More than a million energy customers were without power immediately after the storm — as of September 7, more than 400,000 still didn’t have electricity.
Authorities hope that most will have it back by the end of this week. Residents who evacuated before the storm were asked to stay away until power and water can be restored.
The USPS closed SCFs New Orleans, Baton Rouge and Lafayette LA on August 29. They reopened all by late in the day on August 30, and have been taking in a limited number of loads since then. Mail delivery was suspended in the SCF New Orleans (700-704) area from August 30 through September 6. As of September 7, the USPS started to deliver mail throughout the SCF, but mail will be delayed at least through this week. When the USPS cannot deliver to an address, they may offer the mail for pick-up or will handle it using their normal procedures if there are forwarding orders in place.
Mail delivery was disrupted Thursday, September 2, in the New Jersey, NYC, Philadelphia and CT region due heavy rain and flooding from Ida.
The USPS continues to move the mail slightly faster than it did this same time last year. We do expect to see some slowing as we move into September and volume increases. Note that although the mail is moving a little better than last year at this time, it is still quite a bit slower than in 2019, pre-pandemic.
We had previously reported that the First Class and certain Periodical Service Standards were changing on August 29. Note that the actual date of implementation for those changes is October 1.
Mail volume for the week ending August 28, compared to 2020
- Total Mail Volume: Up 7.8%
- Packages: Down 11.8%
- Single Piece: Down 7.8%
- Presort First Class: Up 2.8%
- Marketing Mail: Up 30.1%
- Periodicals: Up 11.4%
Congress is working to pass postal reform bills that currently enjoy broad support in both Houses. The legislation would further reduce the USPS’s need to increase postage rates.
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.
Paper market challenges
Overall, paper markets in North America are in short supply with low inventories, rising costs and rising prices. With another increase slated for October 1, the total price hike this year could range between 15% and 27%, depending upon grade of paper.
The paper industry currently faces three significant challenges.
COVID-19’s economic impact: Multiple paper producers eliminated significant graphic paper production capacity. It’s impacted capacity upwards of 40% in some paper grades. Some mills transitioned paper machines to packaging grades, while others shuttered altogether.
Print and paper demand bouncing back: Paper mills are sold out through at least the fall. Mills are operating at 100%, but there’s no room for error through the remainder of 2021.
Transportation disruption and shipping costs: Fuel and energy prices are driving up costs everywhere. Everyone is facing a shortage of trucks and drivers. Global shipping and supply chain disruptions continue amidst the pandemic. Meanwhile, the national load-to-truck ratio is currently 6:1, instead of the typical 3:1.
Quad’s Paper Services team is working with paper suppliers daily to review schedules and supply chain status. We’re implementing several solutions to fill rejected orders that have surpassed our allocations.
The US logistics network is still experiencing a stressed supply chain, especially in the LTL space where we continue to see delays of 2-3 days from the published transits, and a larger number of mis-routed product by these Carriers. They’re experiencing 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. Carrier rates rose the last week of August and prior to Labor Day weekend due to capacity issues. It’s unclear whether increases are because of the end-of-month timing or the holiday, but rates did climb again in an already very tight market.