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PAPER trends Forest Stewardship Council Certification Received (March 2008) Paper Market Tighter, Prices Higher (January 2008) Influence Stock Gets Brighter (May 2006) Prices Drop on IP's Influence (May 2006)
POSTAL trends Intelligent Mail Barcode Ramifications (May 2008) USPS Finalizes Address-Requirement Rules (May 2008) Postal Increases on the Horizon (February 2008) Proposed Rule Changes from USPS (February 2008) Significant Rise in International Mail Costs (January 2008) Postal Rate Commission Rules Against Altering Periodicals Rate Structure
PAPER trends Forest Stewardship Council Certification Received March 2008 — United Litho, Inc., recently earned Forest Stewardship Council (FSC) Chain-of-Custody certification (SGS-COC-004057) from the SGS Group, the world’s largest organization in the field of third-party inspection and verification. This certification allows ULI to be responsive to a growing trend in the paper and printing industry of companies making more environmentally and socially responsible supply-chain decisions. Chain-of-custody certification verifies that products from certified forests are not mixed with products from uncertified forests at any point in the supply chain, from the forest to the consumer. Conscientious consumers can look for the FSC logo on wood products to know they are supporting forest management that protects biodiversity and supports local communities. "All of the papers we currently offer our customers, whether recycled or not, are provided by mills and distributors who follow responsible forestry practices, such as those established by the Forest Stewardship Council,” said Chris Azbill, vice president of operations at United Litho. “This chain-of-custody certification will allow us to provide the option to our customers to produce a magazine using 100% guaranteed FSC-certified paper – from forest to printed product.” Azbill noted that both of the paper merchants used by United Litho – Frank Parsons and Xpedx – are FSC certified, as are the two major paper companies used (Sappi and New Page). Founded in 1878, the SGS Group operates in more than 140 countries with over 1,180 offices and more than 32,000 full-time employees. The SGS Qualifor Program is the SGS Group’s forest certification program, internationally accredited by FSC. SGS has granted more than 180 forest management certificates covering over 40 million acres of forest in more than 40 countries. Paper Market Tighter, Prices Higher February 2008 — The news from the paper mills isn't very good these days. Environmental pressures are greater, operating costs are higher, losses are steeper, and mergers and buy-outs have been coming thick and fast. As a result, the market's tight and getting tighter — and prices are going up accordingly. Industry experts predict across-the-board increases of up to 21% by the end of 2008. And some papers may not be available at any price. More than 700,000 tons of European paper were taken out of the U.S. market in 2007 as mills closed and the value of the dollar declined in comparison to the Euro. Mill closures and machine shut-downs also had a significant effect on the North American market, resulting in a reduction of more than 1 million tons of paper. More closures and machine shut-downs are expected in Europe and North America this year. As more machines are taken out of play, mills tend to discontinue the grades and basis weights that they feel are less profitable. The situation is further exacerbated by the remaining mills' inability to stay far enough ahead of demand to maintain excess inventory in distribution centers. And papers certified by the Forest Stewardship Council (FSC) will be even harder to get. Not only is there a great deal of pent-up demand, but recent mergers have adversely affected the supply chain. Domtar, perhaps the biggest maker of FSC-certified paper, closed the mill where FSC paper was made as part of its merger with Weyerhaeuser, and hasn't yet been able to get an alternate mill certified. Stora Enso North America — another leading supplier of FSC paper — was just acquired by NewPage; mill closures announced to date will not affect its FSC sheets. The good news is that ULI has strong, long-standing relationships with the biggest mills in our market. Those relationships are critical, Purchasing Manager Melissa Fisher explains. "Because we're already good, long-term customers who buy large quantities on a regular basis, we'll be in a much better position to continue to get the paper we want in a tight market. But advance notice of any special needs is really important, and it's always a better bet for our customers to use the standard papers that we keep in stock. We might be lucky enough to get a special-order paper at first ... and maybe even for months. But when the market gets tighter and the mills have to scramble to keep their big customers supplied, small or occasional orders are the first to be sacrificed." May 2006 – International Paper, which announced in the first quarter that the shade on the Influence stock would be changing in the second quarter, has begun shipping the brighter stock. Both 45# and 50# Influence stocks now have a brightness value of 86, instead of the previous 82, and 60#, 70#, 80# and 100# are now 88 rather than 84. Not all of the brighter basis weights will ship at the same time; the first to change will be the 50#, which will arrive at ULI during the week of May 30. Although it will be impossible to avoid mixing different shades when different basis weights are involved—as with cover and text stock—we will not mix two different shades of a single basis weight on a given job. May 2006 – International Paper has announced a price decrease on all basis weights used at United Litho. Prices on the 45# and 50# sheets have been reduced by $2.75 per hundred-weight, while the 60#, 70#, 80# and 100# sheets will see a decrease of $1.75/CWT.
POSTAL trends Intelligent Mail Barcode Ramifications (May 2008) USPS Finalizes Address-Requirement Rules (May 2008) Postal Increases on the Horizon (February 2008) Proposed Rule Changes from USPS (February 2008) Significant Rise in International Mail Costs (January 2008) Postal Rate Commission Rules Against Altering Periodicals Rate Structure
Intelligent Mail Barcode Ramifications For publishers (known to the USPS as mail owners), there are two major areas of concern: the quality and integrity of the mailing list database, and the new requirements for mailer IDs and unique serial numbers. List integrity Database quality is likely to become even more important with the implementation of the IMB, since the USPS may begin assessing additional postage or penalties for putting bad addresses into the system. Because of the amount of tracking data built into the IMB, the postal service will be able to identify the mail owner, postage sort level and any problem that might occur with an individual mail piece, as well as the associated cost of dealing with the defective mail piece. The most important thing you can do to create efficient and cost-effective mail is to clean up your data:
Mailer ID
There’s no question that IMB and its implementation will present big challenges for all involved. What’s critical is that both publishers and mailers become — and remain — engaged in the process to make sure they’re not caught off-guard by the changes necessary to accommodate this mandate. USPS Finalizes Address-Requirement Rules Designed to ease the implementation of its Flat Sequencing System (FSS), the new rules restrict the positioning of mailing labels and requires larger fonts, more-generous line spacing and the inclusion of a new 11-digit Postnet barcode or Intelligent Mail Barcode, rather than the current 9-digit barcode. (Read more about the ramifications of the Intelligent Mail Barcode.) For the first time, the USPS will restrict the location of the address on flat-sized mail and call for specific standards for type size and font design, noting, “We are adopting new standards to require the delivery address in the upper portion of all Periodicals, Standard Mail, (…) flat-size pieces mailed at automation, presorted, or carrier route prices.” Of critical importance to publishers is the fact that those who do not follow these rules must pay first-class postage, since there are no single-piece rates for these classes of mail. With respect to label placement, the new rule reads as follows: “Mailers may place the address parallel or perpendicular to the top edge, but not upside down as read in relation to the top edge. The new standards define upper portion as the top half of a mail piece, but we encourage mailers to place the address as close to the top edge as possible (while still maintaining an 1/8" clearance from the edge).” Below is an example of the required placement and orientation of the label for a bound flat-size piece that is not in a polybag or an envelope. Note the bound or spine edge is on the right side of the example regardless of whether the label is on the front or the back of the piece. If the label is on Cover 1, it must be at the physical foot of the piece with its orientation being upside down to the graphics on the book. If the label is on Cover 4, it must be at the physical head of the piece and the orientation will be right-side up in relation to the graphics on the book.
Because a flat-size piece in an envelope or a polybag may be fed into the sorting equipment in either direction since all edges are sealed, the bound edge is no longer a factor in the placement of the label.
In addition, the USPS has implemented actual size requirements for the font used for the address label: “Mailers must address all presorted, carrier route and automation flat-size mail pieces using a minimum of 8-point type or — if the mailpiece bears a POSTNET or Intelligent Mail Barcode with a delivery point routing code — a minimum of 6-point type in all capital letters. In addition, for all automation price pieces, the characters in the address must not overlap, the address lines must not touch or overlap, and each address element may be separated by no more than five blank character spaces.” In response to objections noting that the 8-point type size requirement will require either larger address labels or the elimination of some of the data currently included on labels, the USPS noted, “We reduced the requirement to 6-point type (using all capital letters) on pieces that bear a POSTNET or an Intelligent Mail barcode that contains a delivery point routing code. In our models, we were able to place an Intelligent Mail barcode, the barcode clear zone and 6 lines of text on a 1-inch label." Although these new standards will not be enforced until March 29, 2009, they are in effect now and the USPS expects mailers to begin to observe these new requirements immediately where possible. The grace period is intended to permit mailers to use up existing cover wraps, onserts, tip-ons, etc. that do not allow for compliance as currently designed, and to develop and manufacture new product designs. The complete set of comments and the official DMM regulations may be reviewed in full here. Postal Increases on the Horizon February 2008 — The Postal Service Board of Governors recently announced that postal rates will now be adjusted using new regulations issued by the Postal Regulatory Commission (PRC). Consistent with the Postal Accountability and Enhancement Act of 2006, future rate increases will be capped at the rate of inflation for mailing services. Loosely translated, this means that the USPS can announce new rates every 12 months, without the litigation involved in the old process. With the price cap at 2.9% as of 1/16/08, experts in the mailing community believe mailers can expect an increase of approximately 3% within each class of mail, to take effect as early as May 2008. "Of course," says ULI's Mail Services Manager Hugh Tolson, "your mileage may vary. The sub-classes within each class can be adjusted in any way the USPS sees fit, as long as the overall cap is not exceeded." For example, although the "average" increase for Standard mailers in the 2007 rate case was approximately 9%, increases actually ranged from about 2 to 3% for letters up to 40% or more for flat mail. "The safest bet," Tolson says, "is to budget for an increase of 4 to 5%. If it turns out to be less than that, you'll be that much farther ahead." Proposed Rule Changes from USPS February 2008 — Designed to ease the implementation of its Flat Sequencing System (FSS), the proposed rule change from the U.S. Postal Service would restrict the placement of mailing labels on all flat mail pieces and require larger fonts, more-generous line spacing and the inclusion of a new 11-digit Postnet barcode or Intelligent Mail Barcode, rather than the current 9-digit barcode. The address-placement requirement is of particular interest to magazine publishers, since it may affect cover design. Under these new rules, which could take effect as early as August of this year, the address block must appear in the "top" third of the cover when the spine is held in the right hand. This would be the bottom third of the front cover, or the top third of the back cover. If the address is parallel to the top (or short) edge, the entire address block must appear within 3 inches of the "top" of the mailpiece. If perpendicular to the top edge, one edge of the address block must be within 2.5 inches of the "top" of the piece. ULI is presently running tests to determine how best to accommodate the appearance-related requirements for the mail data itself. But Hugh Tolson, ULI's Mail Services manager, cautions that the options are limited. "Currently, we use a condensed font and pack the lines together pretty tightly. If we need to use 8-point Arial with the line spacing called for in the proposed regulations, we may have to increase the size of the label." Significant Rise in International Mail Costs Postal Rate Commission Rejects Request to Alter Rate Structure October 2005 – The Postal Rate Commission has decided not to recommend the alterations to the Periodicals rate structure sought in the complaint filed in January 2004 by Time Warner, Condé Nast, Newsweek, Readers Digest and TV Guide. In a complaint that pitted the largest commercial publishers against smaller b-to-b publications, Time Warner et al. had requested that bundles, sacks and pallets be considered fundamental components of the rate structure (along with pieces, pounds, distance and presort), arguing that these characteristics are cost drivers that must be considered in rates. Witnesses for American Business Media and McGraw-Hill, which opposed the complaint, testified before the PRC that such a reorganization would have a significant adverse impact on small publishers, many of which don't have enough volume to move from sacks to pallets, or to create large sacks and bundles. The commission ruled that the existing rate structure does not violate existing postal policies and law, as the complainants had claimed.
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