- Demand for graphic paper — the type of paper most frequently used in mail — had been steadily declining until the COVID-19 pandemic, when both demand and subsequent production plummeted sharply.
- There were several reasons for the graphic paper shortage, including changes in paper production, price increases in paper-making materials, and disruptions in the global supply chain.
- The shortage affected the Postal Service’s internal operations, which relies on graphic paper as a key component of operational items such as stamps, envelopes, labels, and postal marketing direct mail.
- Mailing stakeholders were also affected by the graphic paper shortage, which caused some direct mailers to shift their mailing strategies, switch paper products, or downsize their mail campaigns.
“The paper market has experienced volatile fluctuations over the past decade. The COVID-19 pandemic increased demand for packaging paper as ecommerce rose, leading to a decline in the production of graphic paper and graphic paper products. In this Research Insights paper, the OIG examined the major causes of the graphic paper shortage and its effects on the Postal Service and its stakeholders. Between 2000 and 2022, graphic paper production declined due to digitalization and a rise in ecommerce, and graphic paper prices increased between 2017 and 2022. Supply chain issues stemming from a global pandemic, international sanctions, and labor strikes further affected paper production. Paper products are vital to the Postal Service’s business model. A graphic paper shortage can affect the Postal Service’s supply of essential operational items such as stamps, envelopes, labels, and postal marketing direct mail. The Postal Service monitors the paper market and has noted an improvement in the availability of several paper products as of late 2022. Mailing stakeholders were also affected by the graphic paper shortage. For instance, some direct mailers shifted their mailing strategies by using different types of paper or downsizing the number of mail pieces in their mail campaigns. The Postal Service has worked with mailers to test new paper types for machinability and offered promotions to offset rising postage costs for direct mail innovations.”