Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
On Jan. 1, China banned the importation of certain recyclable materials, much of it coming from the U.S., on grounds that they were not environmentally sound. The move, which took effect six months after it was announced, has contributed to a glut of waste in the U.S. market and has sent U.S. waste exporters in search of new global customers.
However, an industry partnership has emerged that may alleviate the crunch. Earlier this year, online marketplace merQbiz joined forces with broker and third-party logistics (3PL) provider C.H. Robinson Worldwide Inc. to streamline the buying and selling of recovered paper (RCP), a process typically mired in red tape and traditionally done by phone, fax, and email between close-knit trading partners. The partnership combines the merQbiz online platform—which connects buyers and sellers in real time with tools that allow them to book, pay for, and track orders—with Robinson's services, allowing buyers and sellers to complete the loop with guaranteed transportation services, an aspect of the business typically left for buyers to manage on their own.
The timing couldn't be better as the RCP market reacts to an oversupply of so-called mixed paper—a broad category that includes magazines and phone books to office paper and packaging—and a desperate need for new places to sell it.
"There are huge impacts within the RCP market out of this [ban]," says John Fox, CEO of Manhattan Beach, Calif.-based merQbiz, which was co-founded last year by German engineering group Voith and Boston Consulting Group's Digital Ventures. "People that relied on the export market as their way of selling material [are] really struggling to find [new customers]."
Fox says the merQbiz/C.H. Robinson collaboration can help by connecting sellers to buyers outside of their traditional networks. "We give [customers] more options," he says, pointing to other parts of Asia as well as South America as places sellers are turning to in the early days of the China ban. "We offer additional market sources. And by having C.H. Robinson on board ... we can provide support for domestic freight as well as the potential to work with [us] for sea transportation."
Scrambling for New Outlets
Adina Renee Adler, senior director of government relations and international affairs
for the Institute of Scrap Recycling Industries (ISRI), echoes Fox's comments about the market difficulties caused by China's ban on scrap materials. Adler says the swiftness of China's actions has exacerbated the problem.
"As a result of this ban ... there is a backup of materials here in the U.S.," Adler adds. "We in our homes and offices and industrial sites are still sending paper to the recyclers, but without a lot of lead time from the Chinese government about the ban, companies were not able to quickly find new customers for that volume."
As a result, mixed paper is being stockpiled and in some cases making its way to landfills. But Adler says there is still strong demand for the product, which is used by paper mills to make everything from cardboard to tissue paper. She says ISRI has seen an uptick in exports to India and Southeast Asia. She adds that there may be potential for sellers to find new markets in North America, as well.
"There is huge potential probably here in North America for that feedstock to be more readily available for paper mills here in the U.S. and Canada," says Adler. "There is some other growth potential, as well. Markets sort themselves out—the challenge was just that China gave us very short notice about it."
Adjusting to Market Changes
The situation is accelerating an existing trend toward cleaner, higher quality materials. Mixed paper is sometimes contaminated, thus explaining China's desire to no longer be considered the world's dumping ground. The U.S. alone processes about 130 million metric tons of scrap materials per year—including paper, plastic, metals, and electronics—a third of which is exported to about 150 countries. Before the ban, China took in roughly 30 to 40 percent of those exports, Adler explains.
It makes sense for China to clamp down on the import of garbage in the interest of cleaning up its environment, Adler says. However, clearer distinctions need to be made between higher quality scrap materials still needed for the country's booming manufacturing business and those that are less desirable.
"We had already started to see a trend in demand for cleaner, high quality material, [so this situation] spurs companies to know that this is a permanent, long-term trend—for materials to be cleaner, separated, and ready to go right into the paper mill," she says. "There are paper processors that are making the needed investments [to do that]."
For Fox and his colleagues, such changes underscore the paper industry's need for efficiency, transparency, and an improved overall transaction experience.
"The China ban has brought increased attention to the international supply chain of recycled paper products and the need for clear visibility," Chris O'Brien, chief commercial officer for Eden Prairie, Minn.-based C.H. Robinson, said in a statement. "For now, it of course increases the current supply available in North America. Long term, markets adjust and in our view merQbiz built their model to deal with all prevailing market conditions by improving the experience."
To that end, in early February merQbiz added an export feature designed to ease the cumbersome documentation process associated with transporting materials around the world.
"This all goes back to addressing a pain point," Fox explains. "Now, not only can I buy and transport the paper, but I have a better way of managing the documentation around that."
"We make the experience of buying and selling RCP better, easier, more transparent—so that whatever the market [conditions], we can provide a better solution and ways to make life easier for the people in this market," he says.
A hefty 42% of procurement leaders say the biggest threat to their future success is supply disruptions—such as natural disasters and transportation issues—a Gartner survey shows.
The survey, conducted from June through July 2024 among 258 sourcing and procurement leaders, was designed to help chief procurement officers (CPOs) understand and prioritize the most significant risks that could impede procurement operations, and what actions can be taken to manage them effectively.
"CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," Andrea Greenwald, Senior Director Analyst in Gartner’s Supply Chain practice, said in a release. "They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”
Following supply disruptions at #1, the survey showed that the second biggest threat to procurement is seen as macroeconomic factors, which include economic downturns, inflation, and other economic factors. While more predictable, those variables can substantially influence long-term procurement strategies.
And the third-most serious perceived risk was geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks.
In addition, the survey also revealed that “leading organizations” are 2.2 times more likely to view energy availability and cost as a top risk; indicating a focus on future emerging risks. As electrification drives demand for power, brittle grid infrastructure raises concern about whether the energy supply can keep pace. Therefore, leading organizations recognize that access to energy will become a significant future risk.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
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Peter Weill of MIT tells the audience at the IFS Unleashed user conference about the benefits of being a "real-time business."
These "real-time businesses," according to Weill, use trusted, real-time data to enable people and systems to make real-time decisions. By adopting that strategy, these companies gain three major capabilities:
Increased business agility without needing a change management program to implement it;
Seamless digital customer journeys via self-service, automated, or assisted multiproduct, multichannel experiences; and
Thoughtful employee experiences enabled by technology empowered teams.
The benefits of this real-time focus are significant, according to Weill. In a study with Insight Partners, he found that those companies that were best-in-class at implementing automated processes and real-time decision-making had more than 50% higher revenue growth and net margins than their peers.
Nor is adopting a real-time data stance restricted to just digital or tech-native businesses. Rather, Weill said that it can produce successful results for any companies that can apply the approach better than their immediate competitors.
Weill's remarks came today during a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI" at at the “IFS Unleashed” show in Orlando, Florida.
For example, millions of residents and workers in the Tampa region have now left their homes and jobs, heeding increasingly dire evacuation warnings from state officials. They’re fleeing the estimated 10 to 20 feet of storm surge that is forecast to swamp the area, due to Hurricane Milton’s status as the strongest hurricane in the Gulf since Rita in 2005, the fifth-strongest Atlantic hurricane based on pressure, and the sixth-strongest Atlantic hurricane based on its peak winds, according to market data provider Industrial Info Resources.
Between that mass migration and the storm’s effect on buildings and infrastructure, supply chain impacts could hit the energy logistics and agriculture sectors particularly hard, according to a report from Everstream Analytics.
The Tampa Bay metro area is the most vulnerable area, with the potential for storm surge to halt port operations, roads, rails, air travel, and business operations – possibly for an extended period of time. In contrast to those “severe to potentially catastrophic” effects, key supply chain hubs outside of the core zone of impact—including the Miami metro area along with Jacksonville, FL and Savannah, GA—could also be impacted but to a more moderate level, such as slowdowns in port operations and air cargo, Everstream Analytics’ Chief Meteorologist Jon Davis said in a report.
Although it was recently downgraded from a Category 5 to Category 4 storm, Milton is anticipated to have major disruptions for transportation, in large part because it will strike an “already fragile supply chain environment” that is still reeling from the fury of Hurricane Helene less than two weeks ago and the ILA port strike that ended just five days ago and crippled ports along the East and Gulf Coasts, a report from Project44 said.
The storm will also affect supply chain operations at sea, since approximately 74 container vessels are located near the storm and may experience delays as they await safe entry into major ports. Vessels already at the ports may face delays departing as they wait for storm conditions to clear, Project44 said.
On land, Florida will likely also face impacts in the Last Mile delivery industry as roads become difficult to navigate and workers evacuate for safety.
Likewise, freight rail networks are also shifting engines, cars, and shipments out of the path of the storm as the industry continues “adapting to a world shaped by climate change,” the Association of American Railroads (AAR) said. Before floods arrive, railroads may relocate locomotives, elevate track infrastructure, and remove sensitive electronic equipment such as sensors, signals and switches. However, forceful water can move a bridge from its support beams or destabilize it by unearthing the supporting soil, so in certain conditions, railroads may park rail cars full of heavy materials — like rocks and ballast — on a bridge before a flood to weigh it down, AAR said.
Imports at the nation’s major container ports should continue at elevated levels this month despite the strike, the groups said in their Global Port Tracker report.
To be sure, the strike wasn’t without impacts. NRF found that retailers who brought in cargo early or shifted delivery to the West Coast face added warehousing and transportation costs. But the overall effect of the three-day work stoppage on national economic trends will be fairly muted.
“It was a huge relief for retailers, their customers and the nation’s economy that the strike was short lived,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a release. “It will take the affected ports a couple of weeks to recover, but we can rest assured that all ports across the country will be working hard to meet demand, and no impact on the holiday shopping season is expected.”
Looking at next steps, NRF said the focus now is on bringing the International Longshoremen’s Association (ILA)—the union representing some 45,000 workers—and the United States Maritime Alliance Ltd. (USMX) back to the bargaining table. “The priority now is for both parties to negotiate in good faith and reach a long-term contract before the short-term extension ends in mid-January. We don’t want to face a disruption like this all over again,” Gold said.
By the numbers, the report forecasts that U.S. ports covered by Global Port Tracker will handle 2.12 million twenty-foot equivalent units (TEU) for October, which would be an increase of 3.1% year over year. That is slightly higher than the 2.08 million TEU forecast for October a month ago, and the strike did not appear to affect national totals.
In comparison, the August number was 2.34 million TEU, up 19.3% year over year. The September forecast 2.29 million TEU, up 12.9% year over year, November is forecast at 1.91 million TEU, up 0.9% year over year, and December at 1.88 million TEU, up 0.2%. For the year, that would bring 2024 to 24.9 million TEU, up 12.1% from 2023. The import numbers come as NRF is forecasting that 2024 retail sales – excluding automobile dealers, gasoline stations and restaurants to focus on core retail – will grow between 2.5% and 3.5% over 2023.
Global Port Tracker, which is produced for NRF by Hackett Associates, provides historical data and forecasts for the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast, and Houston on the Gulf Coast.