PPRC 2022: Recyclers consider how to maintain fiber flow, address challenges in OCC market

The Paper Stock Industries chapter of the Washington-based Institute of Scrap Recycling Industries hosted a commodity-focused panel on old corrugated containers (OCC) and mixed paper at the 2022 Paper & Plastics Recycling Conference in Chicago on Oct. 20.

The panel, moderated by Pratt Recycling President Shawn State, was an opportunity for those in the industry who deal in OCC and mixed paper to discuss challenges they’ve faced, particularly since the onset of the coronavirus pandemic in 2020.

Speakers included John Grinnell, vice president and general manager of Delaware, Ohio-based Greif; Jeff Ryalls, vice president of recycled fibers at Foxborough, Massachusetts-based International Forest Products; and Evan Barrett, director of recycling commodity sales at Ontario-based GFL Environmental Inc.

The discussion began with panelists discussing the changes they’ve made to their respective businesses to navigate the changing market versus 90 days ago. As the market has shifted at such a rapid pace, the panelists agreed going back 90 days is like going back two or three years in previous markets before the pandemic.

“These are the kinds of times that test the economics of recycling, and paper is such a wonderful success story in terms of creating a circular economy and a very vibrant recycling industry,” Grinnell said. “For us, what we really have to focus on the basics and making sure that we’re being aggressive in finding the opportunities to take costs out of the process so we can make sure that fiber continues to flow.”

Grinnell said it’s been difficult on supplier relationships when, after two years of robust pricing, the market looks radically different, adding that Greif has been forthright and willing to have those “difficult discussions to make sure the fiber keeps moving.”

“I think anybody that’s in the paper recycling business, it’s not been quite as fun to look at our month-end results here in the last couple months as it was before that,” he said. “We’ve got to keep it in perspective. Ours is an inherently cyclical industry. We’re in it for the long haul.”

Ryalls said a change at International Forest Products has been transitioning from an export focus to the domestic market then back to export, adjusting with the changing market.

“Over the last 90 days, a lot of those things that we set up within the last couple years, we’ve had to reverse and pivot back to export,” he said. “Fortunately, we have a manufacturing business and we have a trading business, so we’re able to pivot quickly. But, over the last 90 days we’ve been exporting significantly more than we had been the past couple years.”

Barrett said the changes have presented an opportunity for those in the industry to diversify.

“This is an opportunity to take a look at how our supply is moving, where it’s going, and why it’s going,” he said. “It’s kind of easy to breeze over these things when the markets are tremendous and fiber is flowing everywhere. But, when it comes to situations like this, it exposes our weaknesses and where we can improve and do better.

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Grinnell said that over the last year and a half, most of the equipment that fell out of the market during the pandemic has now come back. He said what’s on the road is not quite back to the level seen in 2019, “but we’re most of the way back at this point.”

“[I] definitely see that situation getting better in terms of what we’ve done to try to deal with the inflation and fuel,” he said. “Some of the challenges with equipment are still there. We’ve tried to narrow the freight circles. We’ve been a lot more aggressive in trying to look for opportunities to line up backhauls and make sure that we’re really utilizing the equipment as effectively as we can—making sure we understand where we’ve got underweight loads and addressing those loads to just get the most efficiency we can because there’s nothing we can do about the fuel cost.”

Ryalls said International Forest Products also has faced transportation issues, but more so on the driver retention side, as well as high fuel costs. The company has increased wages to retain drivers and bring new drivers into its fleets, implemented shorter routes so drivers can be home every night and have reworked stop charges and detention charges so drivers are compensated when there is a delay.

“We’ve been successful in getting our fleet back to where we want it,” he said. “We have it at a healthy level and we’re seeing the market starting to soften, so that’s really good.”

Barrett agreed with his fellow panelists when it comes to freight, describing the situation as “another one of those pain points [where] the pressure was building, building, building and then when it came to the extreme, we had to reset and let the dust settle and find the normal.”

“We’re all just sort of doing our best,” he said. “But it’s certainly better than it was.”

State noted Pratt also has had to increase wages to retain drivers and said it’s gotten easier to find and hire drivers.

The challenges with transportation have not just been on the domestic side. Exporting recovered paper overseas had been problematic for much of the pandemic and remains an issue to this day.

“Historically, we were always able to get export bookings easily,” Ryalls said. “During this three-year global supply chain crisis, the carriers have really dictated to us where we could go, from which coasts we could get books, where’s availability. We’re really basing our sales overseas on where we could effectively ship to.

He said it’s no longer about shipping to a customer with which you have a great working relationship or where you can get the best price, but more about if there is an available booking to the supplier and if, ultimately, they can get the material to the customer.

“That’s been just a big shift in the industry,” Ryalls said.

He added that the industry is starting to see some relief on the export side, particularly over the past 60 to 90 days, but said in the end it will come from supply and demand. “It’s not for the faint of heart trying to get these containers loaded each week and service the accounts and service the customers,” he said. “It’s extremely difficult.”

Curbside recycling is yet another aspect of the industry that has changed since the onset of the pandemic with the material stream evolving with consumer habits. As e-commerce rose exponentially in 2020 and 2021, more OCC was found in recycling streams, but Barrett said now the changes are coming from a push from consumers to see more sustainable packaging.

“I think the stream was evolving even prior to COVID,” he said. “The common conversation that you hear…is that containers are shrinking. We’re getting into more of the one-use packaging and we’re seeing the whole food industry change. … The composition is changing and we and everyone else are doing our best to keep up with it.”

One of the more noticeable changes to the municipal recycling stream is the increase in white paper grades. As people have transitioned to more remote work, white paper that typically would appear in commercial streams is showing up in curbside bins and ending up in bales of mixed paper.

“We’re seeing a lot more of that,” Barrett said. “I think we’re going to need more time to be able to speak on exactly where the levels are and what’s happening. … We’re not through it yet. We’re still in the postpandemic era and we are collecting data as fast as we can, but we’re adapting.”

When it comes to the commercial side of the business, Grinnell confirmed Barrett’s observation of increasing volume of white grades appearing in the municipal stream. “Things that were dependent on people being in the office we continue to be deeply challenged in terms of supply,” he said.

Ryalls though, said grocery volumes are fairly stagnant and consistent with very little variability month over month, but that there have been major swings in retail volumes on the inbound side.

State then posed to the panel what he called the “age-old question” of how the industry can improve education around single-stream recycling, saying it’s something everyone in the industry struggles with as they look for ways to boost the quality of material coming through the stream.

“Everything,” Barrett said. “[It’s] a simple answer.”

He explained that recyclers often are bookended in the circular economy by consumers who want recycled packaging and brands who listen to consumers. “But then it puts us in the middle, and we have a one-way valve right now, especially any of those who deal in the municipal sector,” Barrett said.

“There will be times when things get tough and things get rough and we don’t want to damage the image of recycling or do anything to rattle the cage, but there are realities along with this,” he continued. “If we do want to take a linear economy and make it a circle, that means these two points that were once on each end now become a link in the chain.

“We need to start bringing the economics of recycling into the conversation when we educate.”