Although the ghosts and ghouls of Halloween vanished with this morning’s sunrise another specter is sending chills up fundraiser’s spines.    The Ghost of Supply Chain 2021.

Bobbing offshore on hundreds of ships at anchor outside U.S. ports are shipping containers crammed with holiday goodies that may –or may not—be unloaded in time for the holidays.  It’s not just TVs, laptops, and kids toys that are stranded.  Nope.  From our parochial  perch we’re thinkin’ of all those stranded plush animals, tote bags and calendars that need to be in the mail NOW.

The 2021 Supply Chain issue isn’t limited to the seas.  Here on land there’s a shortage of envelopes, printing paper, press time, and mail shop capacity.  To top it off there’s the  likelihood of postal delivery delays and the absolute certainty of increased postal rates.

Ironically, all this is happening at a time when direct mail is enjoying a banner run of success.  And it’s occurring just as many organizations are preparing their year-end appeals and January acquisition campaign.

Of one thing I’m certain.  Those fundraisers who traditionally rely on the last-minute ability of their suppliers to accommodate them rush and who have and  not  already made arrangements with their printers and mail shops are likely in for a rude awakening.

When I need insights into the direct mail production and postal marketplace I turn to Carolyn Angelini,  Director of Resources and Postal affairs at Production Solutions.  Carolyn is nothing short of an oracle when it comes to insights about production and postal logistics for our sector.

Here are the highlights from my conversation with Carolyn on issues affecting fundraisers using direct mail.

Production and Supply Chain Issues

• There’s a shortage of personnel and capacity in the direct mail industry. This means mail dates are being extended or delayed beyond normal timelines.   Once upon a time –pre-covid—a mail drop delay of a day or two was normal; today, drop dates may be delayed by weeks or even months.
• Many suppliers report not taking on new work until the 2^nd quarter of 2022.
• Organizations accustomed to waiting until the last minute and then putting out an RFP to pit one supplier against another are out of luck.
• The wise fundraiser will plan and book their work six or 12 months ahead.
• Prices of paper are up. Most paper mills are limiting production for existing customers only. This affects both printed material and the manufacture of envelopes.
• Freight prices are up 20-30% (and some as much as 70%) so far this year. So, if you’re mailing from the east coast, but using a printer or other supplier on the west coast you’re in for both a timing and a  budget shock.
• Both the delays in delivery and the cost of freight are related to a national shortage of about 100,000 truck drivers. (For those into trucking metrics– and what fundraiser isn’t?—there’s a stat known as the “loads truck ratio”. Today the ratio is 1:8 which means that for every eight loads that need to be picked up and moved, there’s only one available truck and driver.
• Given the shortages of materials and labor beware of price gouging.
• For those organizations that rely on premiums like plush toys and tote bags, not only are there huge shipping and delivery delays  (remember most of these items are manufactured in China and travel here by sea) there are few manufacturers in the U.S. who can provide these items.

Words for the Wise

Here’s Carolyn’s advice on how to deal in today and tomorrow’s world of direct mail logistics.

• Plan and book ahead. Way ahead.  And hope your suppliers view you as a loyal customer because this is the climate when loyalty counts.
• Beware and alert to “allocations.” The paper mills have put almost everyone on an allocation for this limited resource.  As Carolyn told me, “Even the big guys, the big buyers and printers and it’s hard to forecast both availability and price.  This year paper prices are up close to 30%.”   And, she added, that this is not the time to be late on paying supplier bills.
• Be on time providing artwork and other components to your printer. Today, those who are late in submitting their artwork to printers are losing their place in line.  If for example, your job was scheduled for a particular block of time, if your artwork isn’t ready to go at that moment, you’re likely to lose your place and you mailing may be delayed weeks or even months.
• Be flexible. Given the shortage of paper be prepared to substitute.  If normally you require a colored stock, but the printer can’t get it, use a color tint.  And that same flexibility comes to budgeting.  Check your pricing estimates often and be prepared to change your plans as prices go up.
• Be Kind. Now is NOT the time to prove you’re a hard-assed negotiator. Given the shortages of materials and personnel there’s precious little tolerance out there  for the kind of behavior suppliers once tolerated.

Postal Delivery and Response Times

Setting aside the fact that the current Postmaster General is under investigation by the FBI for conflicts of interest in awarding hundreds of millions in Postal Service contracts to companies in which he has a personal financial stake, what is going on in terms of getting your mail delivered.  And, at what cost.

On the cost front, the Postal Service has announced it will move to a new system of raising rates twice a year—once in January and once in July.  The January ’22 rate increase will likely be limited to the increase in the CPI (Consumer Price Index), but  a larger increase is scheduled to come on July 11, 2022.  Right now, Carolyn tells me that for First Class Mail and Non-Profit letter mail the increase will between 5% and 7%  and for “flats” and periodicals a 7 ½ to 8 ½ % increase.

[An Agitator word to the wise.  The ins and outs of postal rates is way beyond our pay grade.  To stay abreast of this I suggest you email Carolyn [ CAngelini@psmail.com ] and ask to be put on the Production Solutions mailing list or keep yourself posted and involved by joining the Nonprofit Alliance which lobbies on our sector’s behalf. ]

So, what are you going to get for these rate increases?  Slower delivery.

In a remarkable show of wisdom, at the very moment there is a national shortage of truck drivers, the Postal Service has announced it will stop moving mail via the airlines and instead turn to trucking.

As a result, the Postal Service’s “service standard” for delivery of First-Class mail has now moved from 4 to 6 days.  As for Third Class and other forms of nonprofit mail the delivery times are all over the lot.  Much depends on the post office where the mail is entered and, of course, the ultimate destination of that mail.  In short, there is no one standard.  However, I think it fair to assume that you should count on longer delivery times and a longer period for return of Business Reply envelopes.

Not many nonprofits take advantage of the UPS’ mail tracking services which are available for both outgoing and reply mail.  Ask your agency or service provider if this is something you should be doing.

And so…. direct mailers enter the critical year-end season with a stressed supply chain, an almost assured delay in delivery and the new year 2022 with major questions involving costs and availability.    None of these factors need prevent thoughtful fundraisers from taking advantage of the power and potential of direct mail.  But if ever you need to be alert and aware that a business-as-usual approach to planning will no longer succeed it’s now.

Merry Christmas.

Roger

P.S.  An Agitator Raise and Christmas Bonus to Carolyn Angelini of Production Solutions.