• by Tony Silber , Staff Writer, February 2, 2022

The magazine-industry supply chain is getting hit hard this year, with rising costs and distribution disruptions in paper, printing and postal delivery. Industry leaders say there’s no real relief in sight.

The nation’s largest publication-printing company, Sussex, Wisconsin-based Quad Graphics, reported in its most recent biweekly postal/paper/logistics update that “COVID Omicron cases continue to hamper USPS processing and performance, supply shortages have become standard in the North American paper market, and winter storms and vaccination requirements at borders have compounded transportation challenges.”

Media-company CEOs are reporting that printing costs are “skyrocketing,” and that paper stock is hard to come by. “It’s the worst environment for paper supply in my career,” said Chris Ferrell, CEO of Endeavor Business Media, located in Nashville, Tennessee, and one of the country’s largest B2B publishers.

Added Andy Weber, CEO of Farm Journal Media, based in Philadelphia, “Paper is hard to get, so you better have a good relationship with your printer. We’re less than 20% print now, but it is still one of our higher-margin products and still important. Though paper is going up, [our printer] is not gouging us.”

And Tom Kemp, CEO of Secaucus, New Jersey-based Northstar Travel Group, noted that, “Paper prices seem out of control, with potentially four increases scheduled for this year for a compounded total of a 40% increase.

“This encourages us to reduce frequencies and print runs,” Kemp added. “Luckily, print is below 10% of our revenues this year.”

In its update, Quad said COVID is causing staffing shortages within the United States Postal Service. “We are now seeing some fairly serious delays in the St Louis [distribution hubs] for marketing mail letters and flats, and first-class letters,” Quad reported. What’s more, the postal service will file for a rate increase later this year, to be implemented in July, and Quad estimates the increase will be around 6.4%, plus an additional 2% for periodicals and packages.

On the paper front, shortages across the supply chain have limited availability for all grades. “Producers aren’t able to keep up with demand due to the lack of raw materials and labor challenges,” Quad reported. “Paper mills are giving manufacturers strict allocation limits each month. And the Jan. 1 price increases might not be the last we see in 2022.”

The situation is no better in distribution. “Snowstorms in the Eastern U.S. from Georgia to Massachusetts, and COVID’s spread, have kept rates high in the truckload market,” Quad’s update said. “Things remain as expensive as they were during the peak holiday season. The [less-than-a-full-truckload] space continues to be plagued by lost, slow and late deliveries, with no end in sight. The sharp increase in COVID cases has caused labor shortages for drivers and warehouse workers. This has severely affected all modes of transportation, including LTL, truckload and rail.”

Combined, all these factors leave media companies that rely on print publications in an exceedingly tough spot. “We were shocked to hear Quad couldn’t get paper on a special-revenue project of ours after quoting it 10 days earlier,” said Mike Lessiter, president of Brookfield, Wisconsin-based Lessiter Publications. “We had no choice but to go outside at a price that was 12% higher in printing alone. Only one of the five printers contacted could commit to the one-month turnaround.”

Dan Weber, a printing-industry expert and account executive at Sun Prairie, Wisconsin-based Royle Printing, called this year’s printing, paper and distribution challenges unprecedented.

“Each printer is dealing with paper and labor shortages, plus increased costs on almost everything needed to produce and distribute a magazine,” Weber said. “We are not immune to making some clients upset, but we aren’t jacking up print costs like others are. Some of the largest B2B publishers, who’ve whittled down print pricing into the dirt, are getting an eye-opener."

He added, "I’m bidding on work today at levels at least 10% higher than last year, not accounting for paper being 25% higher, postage 9% higher, and oftentimes longer schedules. Hasn’t been fun.”