Oil prices are skyrocketing – what’s the impact on publishing?
Do you own a car or does your house get heated by fossil fuels? In that case you have probably been shaking your head in disbelief when looking at the receipts. Oil prices have skyrocketed over the last year, and it is not over yet. Gazprom, the Russian oil giant, estimates that 2009 prices will reach $250 dollars a barrel.
So transportation is getting more expensive, but how does this impact on publishing?
Well, in terms of having printed matters distributed it surely matters. Most transport companies are charging adjustable oil rates of 10 % or more, or they simply raise prices in general to deal with their increased costs. If your business relies on having printed catalogues, newspapers or magazines distributed, oil prices are directly cutting your contribution margins. Do you re-transfer the bill down to your customers, or do you look beyond the printed page?
At Zmags we see an increased number of companies looking for alternative ways to distribute their prints. This is especially important when distributing heavy prints such as mail order catalogues or product catalogues. By presenting a neat-looking digital copy of your printed catalogue, distribution costs are cut dramatically.
Digital catalogue versions, however, typically cost 10-15 cents (USD) per person which represents a cost reduction of approximately 95% when compared to the postal version. Yes that’s right – you can cut distribution costs down to a dime.
The mail order industry, for example, is working to 2% pre-tax margins and at a time of rampant general inflation, the ability to slash costs by 95% can’t be underestimated enough.
For publishers rising oil prices is not the only threat. Add these facts that the industry is facing:
- Pulpwood prices have increased 24% over the past two years
- M-real and Stora Enso announced at DRUPA that it would be raising the price of its coated magazine papers up to 8%
- The European Printing Ink Association recently announced shortages and thus rises of to 40 % on certain raw materials for ink production.
The publishing forecast looks dim, but the obvious alternative is presenting your catalogue digital. It’s an extremely cost-effective way if you want to avoid these sad, headshaking moments like you get when filling up your car.
