Tough time to transport

Departments - Commodities Paper

Recyclers describe recovered paper markets as steady, but transportation is a bigger challenge.

December 29, 2020

Supply of and demand for old corrugated containers (OCC) seem to be in equilibrium as of mid-December. Recyclers and mills alike are saying market conditions for this material are “stable.”

“No one is calling for additional tons, but loads are getting picked up. It’s stable that way,” says Marty Rusk, the Dallas-based vice president of North America recycling operations at Smurfit Kappa.

He adds that containerboard operating rates have been high in recent weeks. Rusk references the 98.1 percent operating rate as reported in the American Forest & Paper Association’s (AF&PA’s) “October 2020 Containerboard Monthly” report.

“Fortunately, in the Northwest, we have a lot of domestic mills here that are running very strong.” – Steve Frank, president and CEO, Pioneer Recycling Services

A broker based in the Midwest says mixed paper demand also has increased because of the strength in containerboard production. Mixed paper is moving steadily, he says, and generation is up partly because of the holiday season, so supply is good.

In hindsight, a large independent recycler says 2020 recovered paper markets were far better than in 2019. “We’re optimistic on particularly OCC and things that are around packaging for 2021.”

But the bigger issue at hand, the recycler says, is transportation.

Many recyclers and mill operators alike expressed concerns about trucking and ocean shipping throughout most of November and December of last year. Sources contacted by Recycling Today in December 2020 generally agree that trucking is the larger of these two transportation-related headaches. Mill operators tell Recycling Today that securing trucking, particularly with the end-of-the-year holidays, is difficult, and moving material requires much more time and planning.

Generally, trucking has been challenging in recent years as that industry faces a driver shortage. The broker in the Midwest says he thinks the driver shortage worsened during pandemic-related shutdowns. Early in 2020, Bureau of Motor Vehicles offices closed or restricted hours in response to the pandemic or government mandates to shut down, making it harder for potential new drivers to get commercial drivers’ licenses to get them on the road.

The broker based in the Midwest says his company is in a decent position and has been able to control its freight, but adds, “Mills are having a hard time getting trucks to pick up on time.”

With the driver shortage, Rusk says he has noticed a dramatic decline in the level of service provided by trucking companies, while the costs have gone up.

Sources say shipping containers have been hard to come by in November and December. It has been tough securing space on sailings, too.

“Space is tight,” says Steve Frank, president and CEO of Pioneer Recycling Services, which has material recovery facilities in Tacoma, Washington, and Clackamas, Oregon. “Even though you have a booking, at the last minute it can get rolled. It is very challenging in the Northwest. I’m hearing about this all over in our area.”

“No one is calling for additional tons, but loads are getting picked up. It’s stable that way.” – Marty Rusk, vice president of North America recycling operations, Smurfit Kappa

Sources based on the East Coast say they have had the same challenges securing containers. The container shortage is partly related to the holiday season, but another cause is the global reworking of shipping lanes to Southeast Asia since China stopped importing recovered paper Jan. 1.

“Southeast Asian economies are rebounding fast,” Frank says. “They’re trying to get containers, and maybe in some cases, they are happy to take them back empty.”

With the container shortage and trucking issues, Frank says movement is “choppy.” He adds, “Fortunately, in the Northwest, we have a lot of domestic mills here that are running very strong.”

The Brussels-based Bureau of International Recycling (BIR), also notes that U.S. recyclers are facing a “lack of truck drivers and containers,” in a Dec. 8, 2020, news release.

Transportation is tough in other parts of the world, too, including Canada and the United Kingdom, the association says. BIR says recyclers based in the U.K. have experienced container shortages and freight hikes.