For paper recyclers who move material long distances, shipping companies are crucial allies, according to Ranjit Baxi of J&H Sales International, London.
Baxi, who moderated a session at the 2008 European Paper Recycling Conference entitled “The Impact of Logistics,” said that for recyclers “to succeed in business, our key partners” in the shipping industry and recyclers “must be aware of each others’ roles.”
Baxi estimated that on a typical day some 21,000 trucks are deployed somewhere on the planet moving recovered fiber from point A to point B, and some 5,000 ocean shipping containers may also be in transit on a typical day.
In Europe, ocean shipping is undergoing a change with the dissolution of the Far Eastern Freight Conference (FEFC), a consortium of shippers that previously had been able to coordinate their pricing and schedules. As of October 18, each company will establish its own rates, noted Baxi.
He also noted that since July rates in general had been falling, partly because fuel prices finally began to moderate.
Peter Hall of the London office of APL Logistics noted that fuel costs had grown to represent 71 percent of the overall cost of shipping in August 2008, when fuel prices had peaked.
The balance between capacity and demand is another major pricing factor, and that balance appears to be shifting toward capacity exceeding demand.
Hall noted that “less consumer spending due to less consumer confidence means less demand for products,” and that while global trade growth is “not negative yet,” it is slowing.
This is occurring at the same time that container ships ordered two years ago are beginning to be added to fleets. The balance shift is apparent already, says Hall. FEFC companies ran at 97 percent of capacity in the second quarter of 2007, but that rate was down to 88 percent in the first quarter of 2008.
Alan Bog of the Changshu City, China, office of port operator Westerlund, said he does not foresee shipping rates falling through the floor. “I don’t think we’ll go back to when shipping was a cheap commodity market.”
But he did note that margins for container shippers appear to have peaked in 2007 and that because of the state of the overall economy, carriers “have concerns.”
The 2008 European Paper Recycling Conference, hosted by the Recycling Today Media Group, took place at the Marriott Amsterdam Oct. 6-7.