With industry sales largely flat, one way publishers have maintained their profit margins in recent years is by operating more efficiently and taking costs out of the supply chain. But publishers’ ability to contain costs could be put to the test this year as the price of paper rises.
As one publisher noted, because of an overall decline in demand, paper prices have been good for several years. In early 2018, however, a number of events have led to a decline in the paper supply and an increase in prices.
Supply has also been reduced by an environmental crackdown in China, which has reduced the amount of imports from there, said John Maine, v-p for global graphic paper at RISI (a company that analyzes the forest product market).
Another factor driving up prices, Maine noted, is that the cost of pulp has increased by 25% over the past 18 months. Also adding to the cost is higher transportation charges, as trucking companies cope with driver shortages and higher fuel costs. In the near future, Maine told BMI attendees, “tight markets due to supply cuts, rising costs, and a weaker dollar will push up the cost of paper.”
At the recent PPA Festival in London, Sharon Thompson, Production Director of Immediate Media, who produces the UK’s largest selling title by subscription, the Radio Times, stated her biggest problem was not only the challenge of soaring paper costs but also the closure of paper mills. Of particular concern was that the industry capacity for wood-free papers was being “taken out”. And as she remarked, “people still want printed product”.