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Paper Buyers Catch "e-Wave"

January 2000 By Erik Cagle
And they're catching this latest e-commerce wave via full-service trading sites on the Internet.

Once again, paper buyers from around the country are reporting price increases for printing grades. According to the National Association for Printing Leadership (NAPL), nearly 75 percent of printers polled in October 1999 reported price increases, whereas slightly more than 20 percent reported a rise last April.

According to Andrew Paparozzi, chief economist for the NAPL, paper markets should continue to tighten and prices rise, with an anticipated strong growth for the U.S. economy this year backed by a recovering Asian economy. It is a trend that may well last throughout the calendar year.

Trends, like rules, are made to be broken—as witnessed by the summer of 1999 price hike that shook paper purchasers from a year-long slumber. While paper prices do not have a history of short-term volatility, at least one fairly recent development has the potential to make more than a few waves, not only in price structure, but in the manner in which paper is transacted: Internet-based paper trade hosting sites.

Leading this pack of companies is PaperExchange.com, founded by Hilton Plein in 1996 and whose major investors include The Kraft Group, led by CEO Robert Kraft, owner of the NFL's New England Patriots. A site that initially focused on the trading of containerboard, PaperExchange has grown to include all grades—stocks for packaging, publications, commercial printing and office use—as well as pulp.

"At first, we thought specific grades would lend themselves toward our model and we thought that we'd have to focus on those grades," notes Colin Carroll, North American director of sales strategy at PaperExchange.com. "What we found, though, is that buyers have come in across every printing and product segment. We've come to understand that all printing and writing grades are a good fit for our site. We are working to fundamentally improve the efficiency of the market. Initially, we thought coated rolls, or just rolls, would be the large sellers because people order them in truckload quantities. And certainly we arrange many truckload, railcar and larger transactions. But we've also had people successfully buy and sell quantities as small as a skid or two.

"On high-end, premium grades, I think that people who consume and manufacture those grades are scattered," he adds. "There really isn't a convenient place to find all of your options, but PaperExchange has become that one place where you can go and find out all your options for high-end premium needs."
 

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