Thursday, March 12, 2009

Heavier Paper Can Save Money

Thanks to the U.S. Postal Service, low fuel prices, and the depressed paper market, publishers should take another look at using heavier paper.

Conventional wisdom in the magazine industry (and the catalog industry as well) says that decreasing the basis weight of the paper will decrease costs. But it’s not always true, and it’s becoming even less true.

Freight rates, especially fuel surcharges, have dropped drastically since last summer’s peak oil prices. Most Periodicals mailers will pay less for weight when postal rates increase in May. And the softening paper market will tend to make heavier basis weights more efficient than when paper prices are high.

Consider the case of switching from 34# lightweight coated (LWC) to 36#, which is typically priced $3 per hundredweight lower, or 38# LWC, which is another $3 lower. When 34# prices peaked at about $56/cwt. last year, that meant 36# was at $53 and 38# at $50. Although the heavier weights require more paper, products shipped via inexpensive ground freight (for example, newsstand copies, newspaper inserts, and in-store promotions) had virtually the same or even lower costs (paper and freight combined) at any of those three basis weights.

Mailed copies were a different story. With dropshipped Periodicals mailers paying something like 29 cents per pound in postage and freight last summer, going from 34# to 38# would increase combined paper and distribution costs by 3% to 4%. At today’s freight and paper prices, that gap has closed by a percentage point or two.

Now consider how things will look in a few months, when LWC prices may be $11/cwt. below last year's peak: At an average distribution cost of 15 cents per pound, switching from 34# to 38# would cost nothing. With combined postage and freight costs for dropshipped Periodicals mail down to about 24 cents and newsstand freight at about 7 cents, some publishers with substantial newsstand draws may actually save money by increasing basis weight. (Or they may find their paper suppliers willing to discount 34# more than 38#.)

This knowledge can become especially powerful when considering a move to a less expensive paper grade. Suppose, for example, that a magazine using 45# #4 wants to reduce costs and counter perceptions that its issues are too thin. It could bulk up the book and probably save money by switching to 50# #5.

Or suppose it is considering a money-saving move from LWC to SCA (supercalendered) but is concerned about the latter’s low bulk or opacity. It could counter those drawbacks, and still save money, by switching to heavier SCA.

Here’s another reason to get a handle on how changing basis weight would affect your costs: the euro. With their own currency doing a nosedive and their home market oversupplied, European mills are once again casting longing glances at the U.S. market. But the basis weights from European mills don’t match those of North America exactly. So when a European mill proposes a price on 57 gsm (38.5#) paper, you cannot compare that to a 38# price from a North American mill without knowing how the slightly heavier paper affects your distribution costs.

What about the environmental impact of heavier paper? Some people use a simple rule of thumb that lighter is better because it uses fewer trees, but that is not always true. Lighter groundwood papers often have a higher proportion of chemical (kraft) pulp than heavier papers, and it’s harder to use recycled content in lightweight papers. Increasing basis weight while lowering the grade may make your paper greener if it reduces the bleach, kraft, and energy required to produce the paper.

Standard-class mailers, such as catalogs, face a far different situation than do Periodicals mailers. Below 3.3 ounces, they pay no weight-based postage, but above that they will generally pay more than 40 cents per pound when the new rates take effect in May. That means they can save money by switching a thin flyer from 34# to 38# but would see costs increase significantly if they did that with a full-sized catalog.

But Periodicals and Standard mailers also have something in common: Cataloguers often use heavier paper on newspaper inserts than on copies of the same piece that are mailed, just as some large-circulation magazines start printing their newsstand copies on heavy paper and then switch to a lower basis weight for their subscriber copies of the same issue.

If you would like a simple spreadsheet model for comparing the total cost (paper, freight, and postage) of paper at various basis weights and prices, drop me an email at I can also offer a model for calculating the impact of the new Periodicals rates. I won’t charge you any money for the models as long as you join my LinkedIn network and promise (cross your heart and hope to die) to spread the word about Dead Tree Edition.

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