The Trend Report: Q3 2023

The best way to predict the future is to predict the one you want. Check out our take on current trends and how to adapt to them.

Forecast: Production Costs Remain Stable Through 2023

Breathe a sigh of relief because, through Q3, much-awaited stability in production costs has been achieved. We are also happy to share that we are expecting little-to-no cost increases throughout the balance of the year. Weak demand in Q2 2023 is the main driver for our hopeful forecast. We are seeing a dramatic drop in our pricing index for most paper grades, specifically uncoated freesheet, which impacts a significantly high proportion of NPO direct mail package components. However, it is important to note that paper mills remain firm on pricing for coated freesheet, so be aware of that for specialty stocks. Additionally, label material is readily available and prices are projected to remain flat.

Key takeaway: Production costs should continue to sail smoothly through 2023. Your PS team keeps a close eye on the leading indicators that affect your pricing to provide you with accurate projections as we move toward 2024.

Strategies to Offset Postage Rate Increases

USPS postage increases took effect on July 9, 2023. If you have not done so already, be sure to download our 2023 Postage Rate Chart. As you consider your postal budget, continue to expect postage to increase twice per year, in January and July. However, the good news is CPI is stabilizing, so projections for upcoming increases have been downgraded. Additionally, the USPS is working to create incentives for mailers who increase volume year over year – stay tuned for more information on this exciting development! PS is here to find unique ways to offset your increases by conducting a thorough postal audit, utilizing the USPS promotions, optimizing your mailpiece designs and enhancing your address quality.

Key takeaway: To be prepared for continued postage increases, having a partner by your side is critical to creating a postal logistics and optimization strategy that looks at every facet of your program to uncover hidden savings opportunities.

Trucking & Shipping Industry Turbulence

We have been keeping a close eye on developments in the trucking and shipping industry that started with the UPS/Teamsters strike threat in early Summer. Thankfully negotiations were successful and the strike was averted; however, UPS lost a tremendous amount of revenue and brand equity when consumers pivoted to ship through other mailers. Additionally, Yellow Trucking, the largest freight company in the US, has filed for bankruptcy. The implications are myriad. How will this impact the labor market? How will their lucrative market share disperse? What is the impact on market pricing as the dust settles? So far, the good news is they were not “too big to fail,” and our clients’ portfolios and postal logistics have not been negatively affected.

Key takeaway: The lasting macroeconomic impacts are to be determined, but rest assured, your PS team is looking at this long-term and positioning your postal logistics strategies to be resilient and agile to respond to just this kind of volatility.

We have two feet firmly planted in the present, with a focus on the future. we’ve got you covered. Reach out to your PS contact today if you have any questions.