Strategic & Financial Arguments(TM)

for the pulp and paper industry worldwide

July 2014

Participating as industry experts in pulp and paper financing and M & A deals around the world for over two decades, we continue to see the same mistakes made over and over. This newsletter is designed to help you avoid costly mistakes we have seen others make. We will be giving you one or two points each month to help improve your performance.

Reading the tea leaves at Amazon

Will Amazon's strategy slow the containerboard markets long term?

I had the privilege of attending one of the prestigious marketing events in the world last week. Well, I was online, but it was still a rare treat. This event is sponsored by one of the premier consumer goods marketers in the world. Many, many names would be recognized among the speakers.

What struck me, though, was a discussion about Amazon's strategy. Amazon is building out a warehouse system with the goal of being able to deliver everything they carry to all major markets in the US within four hours.

I have been saying Wal-mart is old fashioned for several years. This statement about Amazon drives it home.

Additionally, and separately, Amazon is pushing the FAA for permission to start drone test flights.

What does this mean to us interested in the containerboard industry? The future of the small Amazon box may be fading.

The warehouses will accept traditional containerboard packaging of 30 or more items in one box. That will not go away. However, the last twenty miles--that four hour delivery window, may be in returnable containers, whether it be by drone or truck. It just makes sense.

FedEx, UPS, and Amazon have been a blessing to the containerboard industry. We certainly love to see Amazon ship every toy, every book, in its own individual corrugated box. But if that box is replaced with a returnable container, watch out.

And watch Amazon closely.

If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.

Sincerely,

Jim Thompson, CEO
Talo Analytic International, Inc.

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