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THE STATE OF THE PRODUCTION INDUSTRY: JULY 2022

July 20, 2022

Traci Cacioppo

3 min read

We’ve come a long way since 2020, but the impacts of COVID-19 are still lingering as industries across the board. In the direct response world, marketers are scrambling for alternatives and stretched timelines as soaring prices and delivery delays affect nearly every aspect of the direct mail industry.

With a myriad of challenges ahead, here’s a 30,000 foot overview of the state of the production industry as well as four actions that you can take to help you navigate these trying times.


Suppliers and paper mills  


Paper is hard to come by these days. Between mill shutdowns, supply chain issues, skyrocketing prices for raw materials, and labor shortages, everyone is on the hunt for paper—and paying a premium when they do find it.

Given all this, paper prices have increased nine times over the 18 months and overall production costs are up 75-100%. To make matters even more challenging, deliveries are not guaranteed and timelines for receiving materials has become total guesswork, making planning incredibly difficult.


Postal rates


Postal rates and overall shipping costs are continuing to rise. A new postal rates increase just went into effect on July 10, and another one is scheduled for January 2023.

Unfortunately, it appears postal rates will continue to increase twice a year—the Postmaster General's announcement in March 2021 laid out a 10-year plan that calls for a significant reduction in processing plants and delivery units while repurposing existing sites to streamline systems. These changes are sure to not only continue the postal rates increase trend, but also delay delivery timelines.


Freight 


Freight costs continue to increase by 35-200% with no signs of slowing down. Between surging gas prices and truck driver shortages, the National Trucking Association predicts that overall freight expenses and the ability to secure trucks and rail cars to move materials will continue to be a pain point for the next ten years.


Ocean Shipping Reform Act of 2022 (OSRA-22)


On June16, President Biden signed the Ocean Shipping Reform Act of 2022 (OSRA-22) into law, effectively broadening the powers of the Federal Maritime Commission to address unfair business practices on ocean carriers and marine terminal operators. As the United States’ first major overhaul of container trade regulations since 1998, this law will help lower shipping costs and subsequently bring down the prices of most products.


What can you do?


While you can’t plan for everything, here are four ways to adjust your campaign strategy to minimize the negative impacts of today’s unpredictable production industry.

  1. Get specific with your mailing lists. With prices soaring, be sure that you’re making the most of your budget by microtargeting your mailing lists.

  2. Plan wayyy ahead. Between delivery mishaps and shutdowns, add even more buffer time than you think is necessary to ensure a (mostly) timely campaign.

  3. Discuss alternatives. Don’t wait for a crisis. Discuss Plans B, C, and D ahead of time so that you can make quick decisions and adjust if or when an issue arises.

  4. Take advantage of USPS promotions. Informed Delivery registration is open, which offers a 4% discount on postage and is running August 1 through December 31. Check out other USPS promotions here.



Looking for more information? 


For more information or assistance with your production strategy, contact us at political@thelukenscompany.com.
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