Important Update Re: Paper, Postage and Supply Chain
As you are likely aware, many industries and business segments in the U.S. economy are experiencing a confluence of unprecedented challenges that are largely related to the worldwide coronavirus pandemic. The printing industry and specifically, Modern Litho, are not exceptions.
Supply chain interruption including a permanent downsizing of production capacity of coated free sheet paper (CFS) by paper mills, across the board inflationary pressure we’ve not experienced for many years, and a labor shortage that doesn’t seem to be resolving itself soon are the reality. If this is the “new normal”, we’re not crazy about it.
Paper Cost. While lumber is getting most of the headlines, paper, also a wood based product, has been increasing in cost on a regular basis since the early part of 2021 as demand outpaces supply. Due to contracted purchase agreements, these increases were delayed for Modern Litho which has helped hold print manufacturing costs down for you. Unfortunately, that ends June 30th as we’ve been notified our primary mills will be bringing our pricing up to market level.
Effective July 1, 2021, paper prices for all products including magazines, catalogs and other publications will be increasing 6 – 8%, depending on the specific paper. For those clients under agreements/contracts, this increase will be itemized as a surcharge on your invoice.
Paper Supply and Availability. There are a myriad of factors negatively impacting the supply chain. In addition to those previously mentioned, one of significance is that foreign sheet imports are greatly reduced due to shipping and container constraints. Both domestic and foreign mills are instituting supply allocations in the marketplace which impacts both availability and delivery timing.
What does this mean to you? Preplanning is critical. If you have a project of significance, consult your account executive as soon as possible about the details including your schedule.
Postage. The United States Postal Service filed notice on May 28 with the Postal Regulatory Commission (PRC) requesting price changes to take effect Aug. 29, 2021 that are in accordance with approvals provided by the PRC last year.
The rate hikes are the largest in a decade and will raise overall market dominant product and service prices by approximately 6.9%. First-Class and Marketing Mail prices will increase by 6.8% while Periodical Mail prices will increase by 8.8%.
The Upside.
- Print communications and packaging are still relevant, important and effective. Perhaps even more so today than they were pre-pandemic.
- The paper mills and forestry industries need to operate profitably in order to sustain adequate wood product production levels and promote ecological sustainability.
- Likewise, the United States Postal System is a vital part of our economy for distribution of goods, information, and marketing communication. It’s in all of our best interests for it to be financially viable, efficient and deliver as expedient as possible.
- We’re focused on serving you, our customer, in a better and more valued way.
I apologize for the short notice on the July 1 paper increase and wish I could tell you with confidence that there will not be additional increases coming down the pike. While our customers have benefited from not having to absorb paper price increases earlier this year, we understand that this is not insignificant. The signals being sent to the print and packaging industry are indicating there will likely be more to come, and on short notice. We’ll be as forthcoming and transparent as possible regarding these changes.
On behalf of our employee and ownership group, we appreciate your business. If you have any questions or need more information, please reach out to your sales representative and they will be glad to help.
