First-Class Cabins

The current year has shaped up to be a frustrating one for scrap recyclers in Europe for a number of reasons.

September 12, 2012
Brian Taylor

Brian Taylor


The current year has shaped up to be a frustrating one for scrap recyclers in Europe for a number of reasons. In southern Europe, economic statistics are gloomy as several nations there deal with austerity measures implemented to control deficit spending.

Meanwhile, industrial production and consumer spending may be healthier in parts of northern Europe but the negative consequences of southern Europe’s difficulties have spilled over in several ways.

For recyclers, one of those negative results has been a reduction in trans-oceanic shipping containers arriving in Europe. As shipping traffic from Asia to Europe has declined, the ready availability (and low price) of containers available for backhaul trips also has declined. The result is fewer ships and fewer containers heading to Asia and a willingness by shippers to charge more for spots on the remaining voyages.

Just as a family planning a holiday on a budget can’t afford numerous first-class seats, scrap recyclers or overseas paper and metals producers can’t afford premium shipping expenses to move material with a limited margin.

In speaking to recyclers in Europe, one of the results of this condition is clear: Asian paper and metals producers are looking first to North America, where shipping rates in 2012 have generally been lower.

Less measurable, but often heard from brokers and consumers of scrap materials, is that the prolonged economic slump in Europe is having another effect: scrap recyclers in North America are widening a quality gap for some scrap products.

With volumes (comparatively) high and brokers representing offshore mills more active in North America, auto shredding plant operators, material recovery facility (MRF) operators and owners of other mechanized processing and sorting plants are able to invest to keep up with technological advances. There are certainly recyclers doing the same in Europe, but low volumes, economic uncertainty and high shipping costs often leave little remaining for capital investment.

A troubling note for recyclers in Europe is that the high shipping costs will not necessarily go away any time soon. In late August, two of the world’s largest container shipping lines, China Cosco Holdings Co. and China Shipping Container Lines Co. (CSCL), reported significant losses in the first half of 2012: China Cosco lost €613 million in the first half while CSCL lost €161 million.

With losses like those, it seems all too likely that recyclers in Europe will continue to face first-class cabin charges to reach distant markets in Asia.