Stick a fork in it: The bull market for paper is officially done.
Confirming what many market participants were already seeing, RISI released a report today declaring that prices have peaked for virtually all grades of publication paper, from newsprint to coated freesheet. RISI has a reputation for accurately reporting current prices but being a bit bullish when it comes to forecasting. So when the respected information provider for the forest products industry says prices have peaked, you can bet on it.
The firm's monthly Paper Trader report took a dramatically bearish turn, showing that market prices almost across the board were lower in October than the company had recently projected. Prices for some grades declined in October, while others hit their peak prices, the report stated.
The exception is uncoated groundwood grades, but even there RISI has turned less bullish on the super-tight supercalendered paper market. It projects that the price of the benchmark 35# SCA will peak early next year and then hold steady, rather than the previous month's forecasts of rising prices into the year 2010.
Respecting RISI's copyright, Dead Tree Edition will not reveal RISI's current or projected benchmark prices; Paper Trader is available only by paid subscription. But we will report that we are seeing and hearing about more aggressive prices for coated groundwood and that in the tighter coated-freesheet market mills are reportedly offering price caps to lock up business for next year.
Much of the contract pricing in the supercalendered market is set for six months or even a year at a time, so there had been much expectation that prices would move up dramatically in January to match this year's ratcheting up of coated prices. But the strong dollar, lower costs for energy and freight, and the deteriorating economy have put the lid on those increases -- and are wreaking havoc for coated groundwood.
Mr. Paper Executive, do you hear those phones ringing at your favorite paper brokers' office? It's not the end users who are calling; they're too busy adjusting their bloated inventories in response to declining ad pages and reductions in catalog circulation. It's the European mills, who have noticed that the dollar has risen nearly 20 percent versus the euro in barely three months while prices were rising, suddenly making the U.S. an attractive market.
Woe to the paper executives who thought "market discipline" had something to do with whips and chains rather than just holding the line on prices. You are likely to find RISI's forecast of a gentle downturn to be overly bullish.
Paper buyers, still smarting from your arrogance when markets were tight, are now watching waves of layoffs and shutdowns roll through their industries. They won't hesitate to push prices as low as possible to keep more titles, and their own jobs, from going under. And they'll find plenty of suppliers willing to price aggressively to keep their machines running, despite your brave talk of ROI targets and shutting more mills.
Friday, October 31, 2008
Wednesday, October 29, 2008
Forest Development, Add-a-name, Intelligent Mail
A few items on other sites worth noting:
- "Private forest owners can make more money selling their land for subdivisions than harvesting it for timber," begins a recent item in the Corvalis, Oregon Gazette-Times.
- Add-a-name and drop-a-name are tricks that cataloguers use to reduce their postal costs, as an item in Multichannel Merchant explains this week. I know of one magazine publisher that tested add-a-name a few years ago and wonder whether others have tried it recently now that the incentives are better. Quick explanation: If you have five Periodicals pieces going to the same postal carrier route, adding a sixth piece will make them eligible for a carrier-route bundle, saving more than 50 cents in postage on the five pieces. That sixth piece might have a negative incremental cost.
- Intelisent's Postal Affairs Blog has a brief item explaining the difference between the "basic option" and "full-service option" for the Intelligent Mail Barcode. Isn't "intelligent mail" an oxymoron?
- If you agree that there's more to environmentally friendly paper than recycled content, go to Folio:'s recent piece about sustainable paper and place a comment saying that people should read "I'm an environmental idiot!". Be sure to copy the piece's URL (http://deadtreeedition.blogspot.com/2008/10/im-environmental-idiot.html) into the comment because Dead Tree Edition is still hard to find via search engines. If what you want is in-depth coverage of sustainability issues regarding paper from a buyer's perspective, go to the Sustainability section of PaperSpecs blog.
Why are monthly magazines so “unwieldy”?
Nat Ives at Advertising Age has a great piece this week discussing monthly magazines being slow to market from an advertiser's perspective. He notes that, in times of uncertainty, marketers want to wait until the last second to make a commitment.
“Unfortunately for monthlies, which often need about two months to get an ad into an issue, the "last second" is often actually well past their deadlines,” he writes.
Don’t be surprised if your publisher starts asking questions (again?) about why your ad-close deadlines are so far in advance of an issue’s actual production and why it takes nearly a month for copies to hit the newsstands.
Here’s the sad part: The Magazine Publishers of America formed an “immediacy committee” five years ago to focus on the issue, but the group has disbanded, Ives writes.
“Unfortunately for monthlies, which often need about two months to get an ad into an issue, the "last second" is often actually well past their deadlines,” he writes.
Don’t be surprised if your publisher starts asking questions (again?) about why your ad-close deadlines are so far in advance of an issue’s actual production and why it takes nearly a month for copies to hit the newsstands.
Here’s the sad part: The Magazine Publishers of America formed an “immediacy committee” five years ago to focus on the issue, but the group has disbanded, Ives writes.
Tuesday, October 28, 2008
I'm an environmental idiot!
I used to think that using post-consumer recycled content to make paper was good, that cutting trees to make paper was bad, and that online editions were greener than “dead-tree” editions. Silly me.
It's taken me years to realize that using post-consumer waste (PCW) in North America to make magazine-quality paper not only does not “save trees”, it’s often actually bad for the environment. The problem is “up-cycling”, the use of low-quality recycled material (such as post-consumer newsprint) to make higher-quality products, such as coated and supercalendered papers.
“Up-cycling of fibers wastes an additional 400 pounds of fiber per ton to make high-quality recycled paper,” states the Association of American Publishers Handbook on Book Paper and the Environment, which does a nice job explaining up-cycling and down-cycling. PCW usually has to be deinked and bleached to make higher-quality papers. There is no such fiber loss when the PCW instead goes into products like cardboard. So insisting that North American mills include PCW in the paper we buy merely bids up the price of that fiber and diverts it from more ecologically appropriate uses. For that reason, at least one publisher has asked its North American paper suppliers not to put post-consumer waste into its paper.
The situation is different in some European countries, where waste streams for office paper (mostly uncoated freesheet) and magazine/catalog paper are kept separate from lower-grade products like newsprint. To get such high-quality recycled fiber in North America generally means using pre-consumer fiber, such as printer waste and unsold newsstand copies.
An argument often made for recycled fiber is that it has a lower carbon footprint than virgin fiber. That is a gross over-generalization that often is simply not true. Pulp and paper mills relying on virgin fiber tend to get their energy from biomass (such as bark) and hydroelectricity. Making pulp from PCW may require less energy, but that energy typically comes from natural gas and coal-fired electricity.
As an environmentalist, it pains me that so much of the guidance the environmental movement has offered regarding paper purchasing, however well intentioned, has been misleading. Take the idea that cutting trees is bad.
Deforestation is definitely harmful to the environment, but there is little correlation in North America between forestry and deforestation. Agriculture and urban development are much larger despoilers of forests.
“To address climate change, we must use more wood, not less,” says Dr. Patrick Moore, a founder of Greenpeace and more recently of Greenspirit. “Using wood sends a signal to the marketplace to grow more trees and to produce more wood. That means we can then use less concrete, steel and plastic -- heavy carbon emitters through their production. Trees are the only abundant, biodegradable and renewable global resource.”
And how about the idea that it’s greener to publish a digital or Web edition than to put ink on paper? There is nothing green about all the electricity it takes to power Web servers and keep them cool. You can buy carbon-neutral paper, but I haven’t heard of any carbon-neutral PCs.
Global climate change is the key environmental issue of our generation, so our green efforts should focus on minimizing emissions of carbon dioxide and other greenhouse gases. For me, when I buy paper, that means selecting mills that use earth-friendly fiber (whether from sustainable forestry or from appropriate recycled content) and emit few greenhouse gases, then having the paper transported in the most energy-efficient manner (e.g. rail instead of truck).
Disagree? Then speak up. I am willing to publish other viewpoints as long as they are well-reasoned and well written; you can email them to dead.tree.edition@gmail.com. Or just click the “Comment” button at the end of this post to share your immediate, unedited response. If we’re going to preserve the Earth as we know it, we need to have more intelligent discussions and debates and fewer knee-jerk reactions and oversimplifications.
It's taken me years to realize that using post-consumer waste (PCW) in North America to make magazine-quality paper not only does not “save trees”, it’s often actually bad for the environment. The problem is “up-cycling”, the use of low-quality recycled material (such as post-consumer newsprint) to make higher-quality products, such as coated and supercalendered papers.
“Up-cycling of fibers wastes an additional 400 pounds of fiber per ton to make high-quality recycled paper,” states the Association of American Publishers Handbook on Book Paper and the Environment, which does a nice job explaining up-cycling and down-cycling. PCW usually has to be deinked and bleached to make higher-quality papers. There is no such fiber loss when the PCW instead goes into products like cardboard. So insisting that North American mills include PCW in the paper we buy merely bids up the price of that fiber and diverts it from more ecologically appropriate uses. For that reason, at least one publisher has asked its North American paper suppliers not to put post-consumer waste into its paper.
The situation is different in some European countries, where waste streams for office paper (mostly uncoated freesheet) and magazine/catalog paper are kept separate from lower-grade products like newsprint. To get such high-quality recycled fiber in North America generally means using pre-consumer fiber, such as printer waste and unsold newsstand copies.
An argument often made for recycled fiber is that it has a lower carbon footprint than virgin fiber. That is a gross over-generalization that often is simply not true. Pulp and paper mills relying on virgin fiber tend to get their energy from biomass (such as bark) and hydroelectricity. Making pulp from PCW may require less energy, but that energy typically comes from natural gas and coal-fired electricity.
As an environmentalist, it pains me that so much of the guidance the environmental movement has offered regarding paper purchasing, however well intentioned, has been misleading. Take the idea that cutting trees is bad.
Deforestation is definitely harmful to the environment, but there is little correlation in North America between forestry and deforestation. Agriculture and urban development are much larger despoilers of forests.
“To address climate change, we must use more wood, not less,” says Dr. Patrick Moore, a founder of Greenpeace and more recently of Greenspirit. “Using wood sends a signal to the marketplace to grow more trees and to produce more wood. That means we can then use less concrete, steel and plastic -- heavy carbon emitters through their production. Trees are the only abundant, biodegradable and renewable global resource.”
And how about the idea that it’s greener to publish a digital or Web edition than to put ink on paper? There is nothing green about all the electricity it takes to power Web servers and keep them cool. You can buy carbon-neutral paper, but I haven’t heard of any carbon-neutral PCs.
Global climate change is the key environmental issue of our generation, so our green efforts should focus on minimizing emissions of carbon dioxide and other greenhouse gases. For me, when I buy paper, that means selecting mills that use earth-friendly fiber (whether from sustainable forestry or from appropriate recycled content) and emit few greenhouse gases, then having the paper transported in the most energy-efficient manner (e.g. rail instead of truck).
Disagree? Then speak up. I am willing to publish other viewpoints as long as they are well-reasoned and well written; you can email them to dead.tree.edition@gmail.com. Or just click the “Comment” button at the end of this post to share your immediate, unedited response. If we’re going to preserve the Earth as we know it, we need to have more intelligent discussions and debates and fewer knee-jerk reactions and oversimplifications.
Monday, October 27, 2008
Big postage increases ahead for magazines?
Magazine publishers expecting a small increase in postage rates next year may be in for a double whammy, our contacts are indicating. Contrary to popular opinion in the industry, Periodicals rates could increase by more than the rate of inflation next year, especially for inefficient mailers.
The U.S. Postal Service seems likely to implement extra-high rate increases next year for Periodicals-class mailers who use sacks instead of pallets, especially if the sacks are not dropshipped, several contacts say. The thinking is that the Postal Service can no longer afford heavy subsidization of sacks and other practices that cost it so much money. Political pressure has prevented USPS from passing its full cost of handling sacks on to the customers.
The big rate increases for sacks would be good news for publishers that mail their magazines mostly on dropshipped pallets, but they might also be in for a surprise. By law, the average rate increase for each class normally would not exceed the annual rate of inflation, currently just under 5%, so usually a large increase for some publishers would mean a small increase, or even a decrease, for others.
The second part of the whammy is that the Postal Service may soon issue a decision on whether it is at least breaking even on the Periodicals class. If Periodicals is a money loser, as some claim, then the Postal Service may be forced by law to implement large Periodicals rate increases.
USPS is slated to announce rate increases for all classes of mail in February, for implementation 90 days later, in May.
The U.S. Postal Service seems likely to implement extra-high rate increases next year for Periodicals-class mailers who use sacks instead of pallets, especially if the sacks are not dropshipped, several contacts say. The thinking is that the Postal Service can no longer afford heavy subsidization of sacks and other practices that cost it so much money. Political pressure has prevented USPS from passing its full cost of handling sacks on to the customers.
The big rate increases for sacks would be good news for publishers that mail their magazines mostly on dropshipped pallets, but they might also be in for a surprise. By law, the average rate increase for each class normally would not exceed the annual rate of inflation, currently just under 5%, so usually a large increase for some publishers would mean a small increase, or even a decrease, for others.
The second part of the whammy is that the Postal Service may soon issue a decision on whether it is at least breaking even on the Periodicals class. If Periodicals is a money loser, as some claim, then the Postal Service may be forced by law to implement large Periodicals rate increases.
USPS is slated to announce rate increases for all classes of mail in February, for implementation 90 days later, in May.
Sunday, October 26, 2008
How sleepy is the giant?
And now for a quick diversion into politics. It's completely off the subject of this blog, but at least it distracts me from peaking at my 200.5K (formerly 401K) account.
I know a public schoolteacher in a multi-ethnic district who went to a doctor whom a friend recommended -- then walked out when she discovered the doctor was black. I would bet she's not voting for Barack Obama next week. I'm also guessing that, if a pollster asked her, she wouldn't admit why she's voting against him and might not even reveal that she's made up her mind for John McCain.
The point is that, despite what the polls say, Obama does not have this election in the bag. He has done an excellent job of not waking what one Southern black politician used to call "the sleeping giant" -- racism. But the giant will still influence many voters this year, and some of that influence is not showing up in the polls. In fact, there is a pattern of black candidates doing worse in actual elections than the polls predicted.
Besides, there is still time for an October (or even November) Surprise. Don't be astonished if rumors of Obama's relationship with a white woman start circulating. It doesn't matter whether they are obviously false, just that enough gullible people believe the rumors and repeat them -- as with the "Obama is Muslim" lie that took so long to dispel.
Am I attacking McCain's character? No way. Both candidates are too busy to control or even know most of what their campaigns are doing. At this point in an election, people working in the campaigns tend to view the race as Armageddon, thus they justify any dirty deeds that might help the Forces of Light overcome the Forces of Darkness.
A personal note: As a child in the South, I heard the epithet "nigger lover" a few times and even witnessed a burning cross on our front yard because of my family's beliefs and actions. To see a black man in serious contention for the Presidency affirms that, to paraphrase James Weldon Johnson, "our weary feet have come to the place for which our parents sighed."
I know a public schoolteacher in a multi-ethnic district who went to a doctor whom a friend recommended -- then walked out when she discovered the doctor was black. I would bet she's not voting for Barack Obama next week. I'm also guessing that, if a pollster asked her, she wouldn't admit why she's voting against him and might not even reveal that she's made up her mind for John McCain.
The point is that, despite what the polls say, Obama does not have this election in the bag. He has done an excellent job of not waking what one Southern black politician used to call "the sleeping giant" -- racism. But the giant will still influence many voters this year, and some of that influence is not showing up in the polls. In fact, there is a pattern of black candidates doing worse in actual elections than the polls predicted.
Besides, there is still time for an October (or even November) Surprise. Don't be astonished if rumors of Obama's relationship with a white woman start circulating. It doesn't matter whether they are obviously false, just that enough gullible people believe the rumors and repeat them -- as with the "Obama is Muslim" lie that took so long to dispel.
Am I attacking McCain's character? No way. Both candidates are too busy to control or even know most of what their campaigns are doing. At this point in an election, people working in the campaigns tend to view the race as Armageddon, thus they justify any dirty deeds that might help the Forces of Light overcome the Forces of Darkness.
A personal note: As a child in the South, I heard the epithet "nigger lover" a few times and even witnessed a burning cross on our front yard because of my family's beliefs and actions. To see a black man in serious contention for the Presidency affirms that, to paraphrase James Weldon Johnson, "our weary feet have come to the place for which our parents sighed."
Saturday, October 25, 2008
Catalog Prospecting: Thar's gold in them thar pages
Our contacts note that some catalogs are cozying up to magazines more than ever.
For example, a toy seller is binding a mini-catalog into a children's magazine, and L.L. Bean seems to be buying more print ads than ever. Magazines struggling to get ad pages (and which ones aren't these days) and catalogs wrestling with high prospecting costs: take note.
Consider the Bean example. It typically buys full-page ads for a single product, often with an invitation to request a free catalog. The traditional cataloguer's view is that magazine ad pages lack precise targeting and have a low response rate. So why does Bean, reportedly one of the most marketing-savvy multichannel merchants, keep running ads in national magazines?
The Bean folks know the metric that matters is cost per response, not response rate. A typical lightweight catalog (the kind that got slammed with postal rate increases of 20% or even more last year) probably costs about 40 cents per piece. An ad in a national magazine probably costs roughly 4 cents per copy ($40 cpm) these days. That means that a response rate on the magazine ad of only 0.5% is equivalent to a 5% response on a lightweight catalog.
Advertisers want to know which media have "engaged," responsive audiences but often have trouble tracking that. Bean has done it for them: You can bet that Bean tracks responses closely by medium, so any magazine that gets its repeat business must have a responsive audience.
My employer's advertising and marketing people would tell you that I don't understand advertising. But I've got one up on them and the rest of the magazine industry: The last time I checked, two mohels were running ads next to one of my Oct. 23 posts. Don't recall seeing that in People, Cosmo, or the other biggies.
Maybe I should contact one of those mohels to help me with budget reductions. They're probably much better than our bean counters at making cuts without damaging essential items.
For example, a toy seller is binding a mini-catalog into a children's magazine, and L.L. Bean seems to be buying more print ads than ever. Magazines struggling to get ad pages (and which ones aren't these days) and catalogs wrestling with high prospecting costs: take note.
Consider the Bean example. It typically buys full-page ads for a single product, often with an invitation to request a free catalog. The traditional cataloguer's view is that magazine ad pages lack precise targeting and have a low response rate. So why does Bean, reportedly one of the most marketing-savvy multichannel merchants, keep running ads in national magazines?
The Bean folks know the metric that matters is cost per response, not response rate. A typical lightweight catalog (the kind that got slammed with postal rate increases of 20% or even more last year) probably costs about 40 cents per piece. An ad in a national magazine probably costs roughly 4 cents per copy ($40 cpm) these days. That means that a response rate on the magazine ad of only 0.5% is equivalent to a 5% response on a lightweight catalog.
Advertisers want to know which media have "engaged," responsive audiences but often have trouble tracking that. Bean has done it for them: You can bet that Bean tracks responses closely by medium, so any magazine that gets its repeat business must have a responsive audience.
My employer's advertising and marketing people would tell you that I don't understand advertising. But I've got one up on them and the rest of the magazine industry: The last time I checked, two mohels were running ads next to one of my Oct. 23 posts. Don't recall seeing that in People, Cosmo, or the other biggies.
Maybe I should contact one of those mohels to help me with budget reductions. They're probably much better than our bean counters at making cuts without damaging essential items.
Friday, October 24, 2008
When business is down, kick the customers
The head of a major postal union offered a novel solution for what ails the U.S. Postal Service this week: Stop communicating so much with your customers.
"You must evict the Mailers Technical Advisory Committee (MTAC) from postal headquarters," William Burrus, president of the American Postal Workers Union, said in an open letter to Postmaster General Jack Potter. He wrote the letter because "the current USPS business plan is not working and cannot be expected to work in the future" and to warn against cost cuts as a response to declining revenue.
"It is unhealthy to have individuals whose allegiances are to their private-sector employers located inside postal headquarters," Burrus went on. "There is no similar arrangement elsewhere in our society, where by sheer proximity a major customer has unlimited access to the nerve center of a company. Do you believe that UPS or FedEx would permit a customer to set up shop inside its headquarters? Can you imagine providing the APWU with offices at postal headquarters? Evicting MTAC will change the psychology of the relationship, and shift them from partners to valued customers."
Burrus is correct that mailers have an unusual level of access to Postal Service management -- unusually bad.
Production managers at magazines and catalogs talk frequently with various people at their paper suppliers and printers. We sit down with them frequently to work out mutual problems and to explore opportunities. We have frequently toured their facilities, met with company presidents, and occasionally even gone into the homes of executives.
But with the Postal Service, a larger supplier for most of us than any printer or paper company, we get a once-in-a-blue-moon visit from a national account rep who knows little about our business and has limited ability to get anything done. We have to rely on industry associations and especially on MTAC to work out existing problems with the Postal Service and to prevent new ones.
I have had disagreements with people on MTAC, but I can't imagine how bad things would be for customers and the Postal Service without this kind of group working on a variety of technical issues. Even as an outsider, I can see that such major Postal Service initiatives as Intelligent Mail Barcode and the Flats Sequencing System would be doomed if not for the work of MTAC.
Here is a link to more information about MTAC. Do you see anything nefarious there? The meeting minutes are especially informative because you can link on PowerPoint presentations that were made at the MTAC meetings.
"You must evict the Mailers Technical Advisory Committee (MTAC) from postal headquarters," William Burrus, president of the American Postal Workers Union, said in an open letter to Postmaster General Jack Potter. He wrote the letter because "the current USPS business plan is not working and cannot be expected to work in the future" and to warn against cost cuts as a response to declining revenue.
"It is unhealthy to have individuals whose allegiances are to their private-sector employers located inside postal headquarters," Burrus went on. "There is no similar arrangement elsewhere in our society, where by sheer proximity a major customer has unlimited access to the nerve center of a company. Do you believe that UPS or FedEx would permit a customer to set up shop inside its headquarters? Can you imagine providing the APWU with offices at postal headquarters? Evicting MTAC will change the psychology of the relationship, and shift them from partners to valued customers."
Burrus is correct that mailers have an unusual level of access to Postal Service management -- unusually bad.
Production managers at magazines and catalogs talk frequently with various people at their paper suppliers and printers. We sit down with them frequently to work out mutual problems and to explore opportunities. We have frequently toured their facilities, met with company presidents, and occasionally even gone into the homes of executives.
But with the Postal Service, a larger supplier for most of us than any printer or paper company, we get a once-in-a-blue-moon visit from a national account rep who knows little about our business and has limited ability to get anything done. We have to rely on industry associations and especially on MTAC to work out existing problems with the Postal Service and to prevent new ones.
I have had disagreements with people on MTAC, but I can't imagine how bad things would be for customers and the Postal Service without this kind of group working on a variety of technical issues. Even as an outsider, I can see that such major Postal Service initiatives as Intelligent Mail Barcode and the Flats Sequencing System would be doomed if not for the work of MTAC.
Here is a link to more information about MTAC. Do you see anything nefarious there? The meeting minutes are especially informative because you can link on PowerPoint presentations that were made at the MTAC meetings.
Thursday, October 23, 2008
Speaking of Katahdin . . .
In reference to Katahdin's idled paper mill (see our Oct. 21 post), someone passed along this moving story from U.S. News & World Report about what this all means to the people in a one-industry town like Millinocket. And, yes, it did appear in U.S. News' dead-tree edition: "Death Watch in a Mill Town"
Call a mohel, this baby's growing!
At just 8 days old (thus the reference to a mohel -- it's Hebrew, look it up), this baby already passed 3,000 visits.
Thanks for the encouraging words, the gossip and tips (need more of those), and for spreading the word to friends and colleagues. I hope not just to write but to stir up conversations that help us all navigate these trying times. I welcome comments, criticism, suggestions, insights, and even guest postings. Feel free to "talk to the Tree" at dead.tree.edition@gmail.com
This truly is a labor of love intended to help this industry I love. Yeah, there are a few ads on the site, but they are mostly so I can occasionally splurge on a Starbucks double mocha latte like the office’s Web genius is always drinking instead of swilling the free crapola from my employer’s coffeepot. Besides, this old ink-on-paper dinosaur is fascinated by an ad model (Google AdSense) where the words “competitive separation”, “ratebase,” and “makegood” are never uttered. And I actually learned something from clicking on one of the ads. (Hint, hint . . .)
Anyway, shoutouts (Hey, if I'm going to do this Web thing, I occasionally have to talk like a Gen-Y) to the Web sites that have featured our posts, including PostalNews, PostalMag, Forestweb (a paid-subscription site), PostCom, and Postal Affairs Blog.
And be careful with that knife, rabbi!
Thanks for the encouraging words, the gossip and tips (need more of those), and for spreading the word to friends and colleagues. I hope not just to write but to stir up conversations that help us all navigate these trying times. I welcome comments, criticism, suggestions, insights, and even guest postings. Feel free to "talk to the Tree" at dead.tree.edition@gmail.com
This truly is a labor of love intended to help this industry I love. Yeah, there are a few ads on the site, but they are mostly so I can occasionally splurge on a Starbucks double mocha latte like the office’s Web genius is always drinking instead of swilling the free crapola from my employer’s coffeepot. Besides, this old ink-on-paper dinosaur is fascinated by an ad model (Google AdSense) where the words “competitive separation”, “ratebase,” and “makegood” are never uttered. And I actually learned something from clicking on one of the ads. (Hint, hint . . .)
Anyway, shoutouts (Hey, if I'm going to do this Web thing, I occasionally have to talk like a Gen-Y) to the Web sites that have featured our posts, including PostalNews, PostalMag, Forestweb (a paid-subscription site), PostCom, and Postal Affairs Blog.
And be careful with that knife, rabbi!
Wednesday, October 22, 2008
New Jersey Swallows Delaware (Death of the SCF, Part 2)
Contrary to what the U.S. Postal Service indicates, New Jersey has not gobbled up Delaware and St. Petersburg, FL has not been relocated to Tampa.
Perhaps as a precursor to more formal consolidation of dropship facilities ("network realignment" in postalspeak), USPS has been reshuffling its dropship map in recent months. Coupled with reduced dropship incentives for the Periodicals class and rising freight costs (see "Death of the SCF"), the result is that mail pools are delivering to fewer facilities. That has caused widespread confusion (and lost postal discounts) for publishers, other mailers, and their presort and freight vendors.
For example, USPS's official lists of dropship locations still show Wilmington, DE as a Sectional Center Facility (SCF) and Area Distribution Center (ADC) serving all of Delaware. But to get dropship discounts on Delaware copies, they have to be delivered to the South Jersey ADC in Bellmawr, NJ. St. Pete is still on the official list of SCFs (affectionately known as L005), but most Periodicals for St. Pete have to be dropshipped at the Tampa ADC to get SCF discounts.
In the mail-preparation process, the mailer still has to designate entries for St. Pete and Wilmington. But then USPS tells the logistics people to take those copies to Tampa and South Jersey. That has led to arguments between presort people and logistics people, sometimes in the same company.
When the Postal Service tries to change where incoming mail is handled, Congressmen and editorial writers get all up in arms about the loss of the local postmark -- and postal jobs. That happened in Wilmington, among other cities. But shifting where dropshipped mail is sorted rarely causes a media or political stir.
Some of the "redirections" apparently are in preparation for the Flats Sequencing System (FSS). For example, the Northern Virginia ADC and Dulles, VA SCF have both been redirected to the building in Sterling, VA where the first live runs of FSS are occurring. The North Metro, GA ADC and Atlanta SCF have been similarly redirected to a different Atlanta location.
The Postal Service's lists of ADCs and SCFs show no hint of these redirections. In fact, nowhere has USPS provided an explanation of redirections or a comprehensive list of these exceptions to the dropship list. The only way to find them is by navigating the USPS's clumsy FAST system (https://fast.usps.com/fast/). To make it even more confusing, some of the redirections apply only to certain sub-classes -- so that, for example, daily and weekly news Periodicals go to one facility and monthlies to another.
In hopes of clearing up the confusion, Dead Tree Edition is offering this exclusive (and, we hope, complete) list of redirections affecting at least some types of Periodicals flats. Listed first is the official ADC or SCF city, followed by the location of the dropship facility:
Perhaps as a precursor to more formal consolidation of dropship facilities ("network realignment" in postalspeak), USPS has been reshuffling its dropship map in recent months. Coupled with reduced dropship incentives for the Periodicals class and rising freight costs (see "Death of the SCF"), the result is that mail pools are delivering to fewer facilities. That has caused widespread confusion (and lost postal discounts) for publishers, other mailers, and their presort and freight vendors.
For example, USPS's official lists of dropship locations still show Wilmington, DE as a Sectional Center Facility (SCF) and Area Distribution Center (ADC) serving all of Delaware. But to get dropship discounts on Delaware copies, they have to be delivered to the South Jersey ADC in Bellmawr, NJ. St. Pete is still on the official list of SCFs (affectionately known as L005), but most Periodicals for St. Pete have to be dropshipped at the Tampa ADC to get SCF discounts.
In the mail-preparation process, the mailer still has to designate entries for St. Pete and Wilmington. But then USPS tells the logistics people to take those copies to Tampa and South Jersey. That has led to arguments between presort people and logistics people, sometimes in the same company.
When the Postal Service tries to change where incoming mail is handled, Congressmen and editorial writers get all up in arms about the loss of the local postmark -- and postal jobs. That happened in Wilmington, among other cities. But shifting where dropshipped mail is sorted rarely causes a media or political stir.
Some of the "redirections" apparently are in preparation for the Flats Sequencing System (FSS). For example, the Northern Virginia ADC and Dulles, VA SCF have both been redirected to the building in Sterling, VA where the first live runs of FSS are occurring. The North Metro, GA ADC and Atlanta SCF have been similarly redirected to a different Atlanta location.
The Postal Service's lists of ADCs and SCFs show no hint of these redirections. In fact, nowhere has USPS provided an explanation of redirections or a comprehensive list of these exceptions to the dropship list. The only way to find them is by navigating the USPS's clumsy FAST system (https://fast.usps.com/fast/). To make it even more confusing, some of the redirections apply only to certain sub-classes -- so that, for example, daily and weekly news Periodicals go to one facility and monthlies to another.
In hopes of clearing up the confusion, Dead Tree Edition is offering this exclusive (and, we hope, complete) list of redirections affecting at least some types of Periodicals flats. Listed first is the official ADC or SCF city, followed by the location of the dropship facility:
- Manchester, NH ADC: Nashua, NH
- Staten Island, NY SCF: Brooklyn, NY
- Glens Falls, NY SCF: Albany, NY
- Buffalo ADC, Jamestown, NY SCF, and Elmira, NY SCF: Rochester, NY
- DuBois, PA SCF: Johnstown, PA
- Oil City, PA SCF and Bradford. PA SCF: Erie, PA
- Wilmington, DE ADC: South Jersey
- Northern Virginia ADC and Dulles, VA SCF: Sterling, VA
- North Metro, GA ADC: Atlanta
- Lewisburg, WV SCF: Bluefield, WV
- Beckley, WV SCF: Charleston, WV
- Mid-Florida ADC: Orlando
- Manasota, FL ADC, St. Petersburg SCF, and Lakeland, FL SCF: Tampa
- McComb, MS and Columbus, MS SCFs: Jackson, MS
- Kalamazoo, Traverse City, and Gaylord, MI SCFs: Grand Rapids, MI
- St. Paul, MN ADC: Minneapolis
- Carol Stream, IL ADC and Palatine, IL SCF: Chicago
- Kankakee, IL SCF: Champaign, IL
- LaSalle, IL SCF: Bloomington, IL
- Galesburg, IL SCF: Peoria, IL
- New Orleans ADC, Baton Rouge ADC, and Mandeville, LA SCF: Port Allen, LA
- Greenville, TX SCF: North Texas (Coppell)
Tuesday, October 21, 2008
Katahdin may enter green energy business
Katahdin’s closed paper mill in Millinocket, Maine may enter the “green” electricity business when it starts making SCA (supercalendered) paper again, its customers were told today.
The company is “proposing to retrofit a large, existing oil-fired boiler with a modern biomass gasifier,” Fraser Papers Limited stated in a letter to customers. Fraser operates Katahdin's mills in Millinocket and East Millinocket; both companies are subsidiaries of Toronto-based Brookfield Asset Management. Fraser has previously cited the use of more than two barrels of oil per ton of paper as the major reason that Millinocket’s one machine shut down in early September.
The new boiler would provide steam for the mill and 20 megawatts of power to the market. But there are several conditions that have to be met, including financing, permits, having a reliable supply of biomass (presumably from trees), and expanded transmission capability, the announcement said. Another Brookfield subsidiary already sells electricity into the grid from a hydroelectric dam at the Millinocket mill.
Demonstrating its intent to reopen the mill, Fraser pointed out that it is spending nearly $1 million to winterize and protect the paper machine and another $500,000 on feasibility studies.
Fraser has not indicated whether rapidly declining prices for oil and kraft pulp, which it purchases on the market, might entice it to reopen even before a biomass conversion is completed.
The company is “proposing to retrofit a large, existing oil-fired boiler with a modern biomass gasifier,” Fraser Papers Limited stated in a letter to customers. Fraser operates Katahdin's mills in Millinocket and East Millinocket; both companies are subsidiaries of Toronto-based Brookfield Asset Management. Fraser has previously cited the use of more than two barrels of oil per ton of paper as the major reason that Millinocket’s one machine shut down in early September.
The new boiler would provide steam for the mill and 20 megawatts of power to the market. But there are several conditions that have to be met, including financing, permits, having a reliable supply of biomass (presumably from trees), and expanded transmission capability, the announcement said. Another Brookfield subsidiary already sells electricity into the grid from a hydroelectric dam at the Millinocket mill.
Demonstrating its intent to reopen the mill, Fraser pointed out that it is spending nearly $1 million to winterize and protect the paper machine and another $500,000 on feasibility studies.
Fraser has not indicated whether rapidly declining prices for oil and kraft pulp, which it purchases on the market, might entice it to reopen even before a biomass conversion is completed.
Sunday, October 19, 2008
More on Maine and FSC
More details have come to us about the subject of "Does FSC certification help the earth?" (http://deadtreeedition.blogspot.com/2008/10/does-fsc-certification-help-earth.html). That describes the effort to have numerous small forestry operators in Maine receive Forest Stewardship Council certification without changing their forestry practices.
Three big makers of coated paper with mills in Maine -- NewPage, SAPPI, and Verso -- are sponsoring the effort, which is known as "landscape certification."
A Verso "Sustainability Report" says "we worked with government, environmental non-governmental organizations (ENGOs), customers and other interested stakeholders to explore opportunities to make certification of forestlands more accessible and affordable to small, private landowners. This effort, which includes identifying and evaluating landscape-scale information that can be used to satisfy the group compliance criteria of forest certification standards, will continue in 2008 with an ultimate objective of certifying 3 million new acres of forestland in the state to achieve the governor’s target of 10 million acres certified in Maine."
Three big makers of coated paper with mills in Maine -- NewPage, SAPPI, and Verso -- are sponsoring the effort, which is known as "landscape certification."
A Verso "Sustainability Report" says "we worked with government, environmental non-governmental organizations (ENGOs), customers and other interested stakeholders to explore opportunities to make certification of forestlands more accessible and affordable to small, private landowners. This effort, which includes identifying and evaluating landscape-scale information that can be used to satisfy the group compliance criteria of forest certification standards, will continue in 2008 with an ultimate objective of certifying 3 million new acres of forestland in the state to achieve the governor’s target of 10 million acres certified in Maine."
Friday, October 17, 2008
USPS Responds to "Death of the SCF"
Someone posted some questions about our "Death of the SCF -- Exclusive Analysis" item on the Postal Customer Council's blog. An anonymous "Blog Administrator1" from the U.S. Postal Service responded:
We don’t have data that supports a big decline in mail being deposited at ADCs vs.SCFs. However, as a result of the the current economic situation, and in particular the increased cost of fuel, some publishers may decide to change their current mail drop locations in order to shorten their travel distances. The United States Postal Service has published service standards that mailers may use in order to make informed decisions about where to drop mail based on the expected delivery timeframe.
There is no maybe; some publishers have definitely scaled back their dropship locations -- and started doing it before fuel prices began skyrocketing
A friend passed along this response to "Death of the SCF" from someone he describes as "an executive of a major publishing company who is very knowledgeable about postal issues":
I think that the author’s representation of the facts is correct but he’s not looking at the long term answer. Yes, they did water down the drop ship incentive but they also realize that they are now giving mailers the incentive to reduce entry points. I’m assuming that they will slowly turn up the burners on the bundle and container rates and gradually get us back to the point where the incentives are better.
Dead Tree Edition's view is that, while the Postal Service may indeed increase incentives to drop ship, it will continue to reduce gradually the number of facilities that accept dropshipped mail.
Crappy Paper
A Stora Enso publication a few years ago profiled an artist who turns moose droppings into hand-made paper. An organization in India is manufacturing paper from elephant dung (No joke: "Handmade Paper from Elephant Dung").
When word of this got around to some publishers, one asked whether certain North American paper manufacturers could use their promises to make paper.
If so, let’s hope it’s not used to produce scratch-and-sniff inserts.
When word of this got around to some publishers, one asked whether certain North American paper manufacturers could use their promises to make paper.
If so, let’s hope it’s not used to produce scratch-and-sniff inserts.
Wednesday, October 15, 2008
Death of the SCF -- Exclusive Analysis
We may be witnessing the slow death of the U.S. Postal Service's Sectional Center Facilities (SCFs). Exhibit A: Periodicals rates.
In early 2007, dropshipping magazines to an SCF rather than an ADC (Area Distribution Center) typically saved publishers several cents per pound. After Periodicals rates were overhauled last year, that changed to about a cent and a half. Meanwhile, rising freight costs have cut further into incentives to ship to SCFs.
(Some background for those who aren't postal geeks: Dropship programs for magazines, catalogs, and other mailed products have traditionally focused on the approximately 350 SCFs spread throughout the country. But in recent years, Periodicals mailers have also been able to obtain some dropship discounts by delivering to the approximately 100 ADCs, the vast majority of which do double duty as large SCFs.)
A logistics executive said it costs at least $75 to stop at a postal facility that is on a truck's route -- and of course more if the stop adds miles to the truck's run. That rules out all but a handful of non-ADC SCFs for even large mail pools.
Here's an example: Suppose a shipper has Periodicals SCF pallets averaging 1,000 pounds each and 40% advertising content and is wondering whether the postal savings from delivering them to the SCF would justify the cost. For each pallet going to an SCF instead of the ADC, there would be savings of $4 on advertising weight, $4.80 on editorial weight, and $5.66 for the pallet -- a total of $14.46. Even in the best case, the shipper would need more than 5,000 pounds just to break even on an SCF delivery.
For a mail pool of 1 million pounds (3 million copies averaging one-third of a pound or 2 million averaging half a pound), 5,000 pounds would represent 0.5% of the total mailing. An exclusive Dead Tree Edition analysis indicates that only six SCFs (Houston, Austin, West Palm Beach, Tampa, Raleigh, and Norfolk, VA) meet the 0.5% standard in a typical pool that is spread relatively evenly throughout the country. And some of those, such as Norfolk, are so far off the beaten path that serving them would cost far more than $75.
One solution is to ship Periodicals with Standard mail (catalogs and direct mail), which has a greater incentive per pound to deliver to SCFs. But that doesn't work for the small printers that produce only magazines and are trying to build economical mail pools for their customers. And truckers report that it's increasingly difficult to get unloaded quickly when dropping a mix of Periodicals and Standard as opposed to a pure Periodicals drop.
There are reports that Periodicals mailers have gradually backed off shipping to SCFs and instead are dropping larger loads at ADCs. That isn't necessarily bad for the Postal Service, which is burdened by having too many small SCFs (and a few ridiculously small ADCs, such as the two serving West Virginia). In fact, the Postal Service is taking other actions that are making some SCFs obsolete -- but more on that in a later post.
In early 2007, dropshipping magazines to an SCF rather than an ADC (Area Distribution Center) typically saved publishers several cents per pound. After Periodicals rates were overhauled last year, that changed to about a cent and a half. Meanwhile, rising freight costs have cut further into incentives to ship to SCFs.
(Some background for those who aren't postal geeks: Dropship programs for magazines, catalogs, and other mailed products have traditionally focused on the approximately 350 SCFs spread throughout the country. But in recent years, Periodicals mailers have also been able to obtain some dropship discounts by delivering to the approximately 100 ADCs, the vast majority of which do double duty as large SCFs.)
A logistics executive said it costs at least $75 to stop at a postal facility that is on a truck's route -- and of course more if the stop adds miles to the truck's run. That rules out all but a handful of non-ADC SCFs for even large mail pools.
Here's an example: Suppose a shipper has Periodicals SCF pallets averaging 1,000 pounds each and 40% advertising content and is wondering whether the postal savings from delivering them to the SCF would justify the cost. For each pallet going to an SCF instead of the ADC, there would be savings of $4 on advertising weight, $4.80 on editorial weight, and $5.66 for the pallet -- a total of $14.46. Even in the best case, the shipper would need more than 5,000 pounds just to break even on an SCF delivery.
For a mail pool of 1 million pounds (3 million copies averaging one-third of a pound or 2 million averaging half a pound), 5,000 pounds would represent 0.5% of the total mailing. An exclusive Dead Tree Edition analysis indicates that only six SCFs (Houston, Austin, West Palm Beach, Tampa, Raleigh, and Norfolk, VA) meet the 0.5% standard in a typical pool that is spread relatively evenly throughout the country. And some of those, such as Norfolk, are so far off the beaten path that serving them would cost far more than $75.
One solution is to ship Periodicals with Standard mail (catalogs and direct mail), which has a greater incentive per pound to deliver to SCFs. But that doesn't work for the small printers that produce only magazines and are trying to build economical mail pools for their customers. And truckers report that it's increasingly difficult to get unloaded quickly when dropping a mix of Periodicals and Standard as opposed to a pure Periodicals drop.
There are reports that Periodicals mailers have gradually backed off shipping to SCFs and instead are dropping larger loads at ADCs. That isn't necessarily bad for the Postal Service, which is burdened by having too many small SCFs (and a few ridiculously small ADCs, such as the two serving West Virginia). In fact, the Postal Service is taking other actions that are making some SCFs obsolete -- but more on that in a later post.
Tuesday, October 14, 2008
Does FSC certification help the earth?
A paper executive made an interesting admission recently to Dead Tree Edition regarding Forest Stewardship Council certification, which many environmental groups view as the gold standard for sustainable forestry.
The executive was describing an effort to get blanket FSC certification for many small forestry operations in Maine rather than having each go through a separate and expensive audit process. Sustainable forestry is common practice in Maine, but small family-run operations have found that the FSC process is stacked in favor of the big guys.
"How would these small operations have to change their forestry practices to get FSC certification?" DTE asked.
"Not at all. They're already doing it, " the executive answered.
The executive was describing an effort to get blanket FSC certification for many small forestry operations in Maine rather than having each go through a separate and expensive audit process. Sustainable forestry is common practice in Maine, but small family-run operations have found that the FSC process is stacked in favor of the big guys.
"How would these small operations have to change their forestry practices to get FSC certification?" DTE asked.
"Not at all. They're already doing it, " the executive answered.
Monday, October 13, 2008
Dueling Bindery Breakthroughs
A patent battle may be brewing between printing giants R.R. Donnelley and Quad/Graphics, but it's their competitors who should be looking for cover.
Four days after Donnelley announced that "Variable Trim Binding (VTB) allows for multiple sized products from multiple customers to be bound in-line in a single, efficient operation," Quad revealed that it was already using its patent-pending "IntelliTrim" technology on more than one saddle stitcher. A Quad insider confirmed that Donnelley's announcement prompted Quad to go public with IntelliTrim. And perhaps Quad's patent application prompted Donnelley's announcement.
One apparent difference between the technologies is that Donnelley's allows variation of up to one inch in either direction among publications being bound together, while Quad's allows such variation only in the side-to-side dimension. Also, the Donnelley announcement does not mention the type of bindery lines using Variable Trim Binding, while Quad specifies saddle stitchers for IntelliTrim.
In any case, the two printers seem to have gained a significant technological advantage over other competitors in the production of mailed magazines and catalogs. Co-binding is a faster, more efficient method than co-mailing of bundling multiple publications together to achieve postal savings. But the need to match up publications with exactly the same trim size has hindered widespread adoption of co-binding. Co-mailing, meanwhile, has exploded for both Periodicals (magazine) and Standard flats (catalog) since postal rates for both classes were overhauled in 2007.
Future posts will provide examples of how to estimate the potential savings from commingling mailings. But suffice it to say that finding the right co-bind situation could save some magazines more in postage than they pay to print the magazines.
Four days after Donnelley announced that "Variable Trim Binding (VTB) allows for multiple sized products from multiple customers to be bound in-line in a single, efficient operation," Quad revealed that it was already using its patent-pending "IntelliTrim" technology on more than one saddle stitcher. A Quad insider confirmed that Donnelley's announcement prompted Quad to go public with IntelliTrim. And perhaps Quad's patent application prompted Donnelley's announcement.
One apparent difference between the technologies is that Donnelley's allows variation of up to one inch in either direction among publications being bound together, while Quad's allows such variation only in the side-to-side dimension. Also, the Donnelley announcement does not mention the type of bindery lines using Variable Trim Binding, while Quad specifies saddle stitchers for IntelliTrim.
In any case, the two printers seem to have gained a significant technological advantage over other competitors in the production of mailed magazines and catalogs. Co-binding is a faster, more efficient method than co-mailing of bundling multiple publications together to achieve postal savings. But the need to match up publications with exactly the same trim size has hindered widespread adoption of co-binding. Co-mailing, meanwhile, has exploded for both Periodicals (magazine) and Standard flats (catalog) since postal rates for both classes were overhauled in 2007.
Future posts will provide examples of how to estimate the potential savings from commingling mailings. But suffice it to say that finding the right co-bind situation could save some magazines more in postage than they pay to print the magazines.
Green Ink or Greenwash Ink?
Quebecor World Inc. made an interesting but rather cryptic announcement last week (http://www.quebecorworldinc.com/news.aspx?id=1970) about "environmentally friendly" inks.
The big printing company is "offering its customers the option to use its new Enviroink™ logo on their printed products to signify they are using heatset inks that contain a minimum of 20 percent, by weight, renewable resources." The offer presumably applies only to customers using heatset offset printing, not those using coldset or rotogravure.
A Quebecor brochure says the renewable resources are pine rosins (a pulp byproduct) and vegetable oils. What neither the announcement nor the brochure say, however, is how these inks compare to what it used to use or what other printers use. Is the use of 20% renewable resources in this type of ink normal, or does it really represent something special? No doubt Transcontinental, R. R. Donnelley, Quad/Graphics, and others will eventually have something to say about the matter.
And doesn't it make you wonder what the other 80% contains?
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