Megan McArdle is talking about a Wall Street Journal article about how fuel increases are making industries look at how they distribute goods.
Companies that ship cheap but bulky goods are adapting the quickest. Three years ago, Kimberly-Clark Corp., maker of Kleenex tissues and Huggies diapers, started revamping its distribution network. Its distribution centers were located next to its production plants. Now the company has eight giant distribution facilities spread around the country. The new setup, which allows the company to rely more on rail, helped it save 470,000 gallons of fuel last year.
This made me think how the comics industry would change.
The collapse of comic distribution down to a single major distributor, has also been accompanied by a reduction in the number of warehouses. I don’t know for a fact, but I think I heard that Diamond now only has one warehouse. I could be wrong, it could be that there could be two or three spread around the country. But there certainly are far less than there used to be.
But when there were more regional distribution centers, distributors often sent their own trucks around to deliver the weekly comics. Today, virtually all comics are delivered to stores via UPS. (A situation that made matters interesting some years back when UPS’ Teamsters went on strike.)
With fuel costs going up, is UPS going to be a more viable or a less viable means of distribution? Will Diamond open up more regional warehouses, trading increased shipping costs from the publishers, for lower costs shipping to the retailers?
Sadly, as far as shipping to the retailers is concerned, the company that makes the choices, Diamond Distribution, doesn’t feel the increase in shipping costs to the reailers as the retailers pay for the cost of shipping. This makes it highly unlikely that any changes will be made quickly, if at all.
But in the slivers of the business where there is competition, such as graphic novels also carried by book distributors, or the smaller distributors of independent books. These sources may have warehouses closer to retailers that provide a savings on shipping costs for some retailers.
On the publishing side, reducing the size of comics, either in page count or dimensions could provide some savings in shipping. Here manga and digest sized books have an advantage over full sized comic trade paperbacks, and hardcovers. Lately the trend has beeen to have greater page counts for more advertising (especially at Marvel) which adds to the bulk, and the shipping cost.
Megan notes that:
How deep the changes go will depend on how much longer oil prices stay above $100. And since as I’ve said before, the best estimate of the future price is the current price, there’s no real way of knowing how long that will be.
So, depending on how fuel prices rise or fall, there could be great change or virtually no change to the comics business.