Sustainable Packaging

Ryan Fox / Bloomberg Corrugated Market Analyst

June 24, 2022 Cory Connors Season 2 Episode 123
Sustainable Packaging
Ryan Fox / Bloomberg Corrugated Market Analyst
Show Notes Transcript

https://www.linkedin.com/in/ryandfox/

Did you know corrugated use for e commerce almost doubled from 2019 to 2021? 
What's it like to be 6'7"? 
Why is corrugated so sustainable? 

An awesome discussion with my friend Mr. Ryan Fox from Bloomberg. 

https://ororapackagingsolutions.com/
Looking to improve the sustainability of your packaging today? Check out:
https://www.landsberg.com/
The views and opinions expressed on the "Sustainable Packaging with Cory Connors" podcast are solely those of the author and guests and should not be attributed to any other individual or entity. 

https://specright.com/ This podcast is an independent production and the podcast production is an original work of the author. All rights of ownership and reproduction are retained—copyright 2022.
https://www.amazon.com/dp/1329820053/ref=as_sl_pc_qf_sp_asin_til?tag=corygat

Welcome to sustainable packaging with Cory Connors. Today's guest is my very good friend, Mr. Ryan Fox. He is the corrugated packaging market analyst for Bloomberg. Hey Ryan, how are you? I'm doing great. Thanks. How are you, Corey? Good man. We've been talking about doing this for a long time. I'm excited to have you on the show. Your wealth of knowledge in the corrugated industry is second to none. And I constantly go to you for, for numbers and input. And I just want to thank you publicly for all that you've done for this you know, world of sustainable packaging. We appreci. My pleasure. Yeah. So number one question. Most important question. What's it like to be six, seven? that's a common, common question, Corey. Typically everywhere I go, I get like, Hey, wow, you're really tall. Did you play basketball? And if I'm really being snarky that day, I'll go. Wow. You're short. Did you play miniature golf? I love it. I love it. I don't know where the height came from, but it's a blessing and a curse. And you know, if I'm at an expo, it's hard to miss me, just look up and you're like, oh, there he is. there he is. I see him. Yeah. Yep. I love it. Well, tell us about your background, sir. Where, where did you come from? How did you get into this world of. Sustainable college. Yeah. So very funny story. Adam Peek and I have very similar backgrounds. He was a pastor. I was a pastor for about six years. So I have an undergraduate degree in biblical studies. That is not a very highly sought after degree when you're, when you're in the world of business. So I went back to school and got a business degree and after. So after the downturn in 2008 I had a friend of a friend who knew that I was looking for a job and they were at a, they were production manager at a box making plant. And so I went into the box industry. I was in I have an engineering bend, so I did pretty well. Just because I enjoyed the projects, enjoyed working with the cool new products that people are trying to bring to market. And I spent about 10 years of my career working for what we call what we call a sheet plant in the packaging world, where they take a, a sheet of paper and they convert it into a box or corrugated. Sheet plants are absolutely an critical part of all of this world of packaging. A lot of companies don't understand how much value those sheet plants add and mills can't do everything. They can't run every order. So those sheet plants are, are critical. Yeah, fun fact, Corey, I shared this with the association of independent Coate converters a few months ago, but all of the real growth in the corrugated market for the last 20 years has been materializing itself in these sheet plants. So you're exactly right. As some of the bigger plants as they want to try to grow, they become more efficient. They just start sending more and more orders to these other sheet plants that can do all of the small stuff, all of the small and mid-size businesses and all of that. It's pretty cool. Totally makes sense to me. Like, like you, I spent five years in working at Weyerhaeuser , which was a, a mill and they didn't wanna run a thousand boxes. They wanna run a hundred thousand boxes. So this, it, it all makes sense to me. Yeah. But tell us about Bloomberg. What is Bloomberg? What are you doing there? How does it work? Yeah. So a lot of people go to Bloomberg for business information. So my, my group is called green markets. We are, we're kind of under the umbrella of Bloomberg intelligence and we do industry research. So I study the corrugated market and we identified some, some areas where the industry was being under reported. There just was some area for us to. To find more tangible information for the marketplace. And so we started engaging producers with a variety of new questions and we've developed a demand index. We report on things that just have a very high level of utility and we're getting a very good response to the, to the work that we're doing. It's invaluable because we need to know what's coming. What, what the trends are so we can plan ahead. That's the number one thing for packaging is. And a lot of a lot of people don't understand that concept. We need lead time. We need to plan ahead. But it's also the, the most difficult thing in packaging. well, that's exactly right. And, and with the pandemic we saw, you know, for the last two years there's been a, a massive influx of orders. The the longest lead time that I've had that I have recorded is, is an average of 22 business days. Yeah. Now that's an average, there were times where producers were out six weeks, it depended on what kind of product it could have been 15 weeks. So we're starting to see a rebound things were starting to turn the other direction. Yeah. There was a problem with labor, but yeah, but all in all it, things are starting to, I'll say level out and, and come back around. Normal. Well, that leads right into my next question. Do you, do you think that production can catch up to demand soon? Well, so that is, that is the question. Yeah. And for many years, production did equal demand. We started to really see a gap last year. Where, where demand was so high and between people getting COVID and not being able to become the work, or maybe they were just going on to find another job, whatever the case may be. There was, there was a gap between what the perceived demand was like in the industry and what the industry was able to produce. And yes, we are definitely seeing a, a more normalization. But I don't know that we're gonna see it. I'll say soon, we don't know exactly when that'll happen. But definitely it's, it's moving in that. and has that increased capacity coming from new plants or are current plants shoving more equipment into current plants? Does that make sense? A little bit of both. Yeah. A little bit of both there haven't been a whole lot of new plants. But there is the, the new capacity is just like you're saying and where people have invested very heavily in new equipment. That's faster, it's more efficient, you know, now you can get. To, to talk in the industry here, like flexo fold or glue is a very popular machine to make boxes and you can get a machine that you can actually set it up while it's running. And so your changeovers are three or four minutes. Amazing. You know, 20, 30 years ago, your changeovers were maybe 20 minutes if you were lucky. Yeah. So that's a huge efficiency savings and, and a lot more sustainable too, because you know, a lot less waste every setup. A lot less waste and you know, some of these machines are, you know, they, they are thinking about. How can we reduce the amount of power needed to run these things? Right? So you know, it's not uncommon now to have a plant in the us that has a solar array on their roof and that solar array is literally powering their, their plant. It's great to see. It's exciting to see. I think people are on board. People are jumping on board, they're making good decisions in the packaging world. And it's an honor to be a part of this trend because I can tell you. You know, 20 years ago when I started it, it was an afterthought. It wasn't the primary decision sustainability, right? Yeah. Yeah. So why is corrugated so sustainable? Well, corrugated sustainable because it is a renewable resource and it is one of the most widely recycled products in the market. The, the things. People don't realize this. It just because something is recyclable doesn't mean that it is recycled, right. There actually has to be a good aftermarket that has value and believe it or not old co cartons OCC for short yeah. Is a very valuable commodity. Yeah. So that's part of the reason why it's it is sustainable is because there is a, a symbiotic relationship between Virgin paper mills, forestry. And the recycling industry where we we're able to make new boxes out of old boxes. It's an amazing process. And I don't know if you want to go over some of those numbers now of, of you're the guy I call when, when, when I have to give a speech you know, and to get my data. So let's, let's, let's tell the, the audience what's really going on whatever numbers you wanna share first. Sure. Well, so it's probably good. To set some groundwork. The industry likes to put forward some really rosy numbers on recycling, you know it's not uncommon to hear people say things like 90% of corrugated boxes get recycled. Yeah. What they don't say in that is that that 90% of the corrug boxes get recycled. It is a it's, it's a calculation that's made. Right? And so there's a, there's a, an equation for how they get the numerator. There's an equation for how they get the nominator. And they really don't say where this stuff comes from. And so the average person, when they hear this, they think. Like this is 90% of the stuff that comes their home gets recycled . And in reality, from a recovery standpoint, over 90% of what is recovered comes from commercial and industrial sectors. So that leaves about seven ish, maybe as high as 10% of what is recovered actually comes from the curbside and curbside. Recycling is incredibly. Under utilized. Yes, absolutely great point. And yeah, although so many people have, have access to it. Not everyone even uses it, you know? So yes, even, even though those numbers are, you know, the Delta is still sad, you know, so the industry also put out some other numbers that were very rosy, 94% of Americans have access to drop off or curbside cycling. Yeah. Okay. great. Now, how do we get people to do it? Because right. Let's, let's face it. Recycling is, I mean, it is pretty easy. Yeah. For a lot of people it's simply just taking the. The thing and putting it in the bin. Yeah. Sometimes it's not that easy if we're talking about plastics or things that need to be wash kind of washed and prepped. But for OCC it's a pretty easy thing. I will say, so the industry data right now says that it's between 30 and 40% of what happens from a residential side is, is actually recovered. So 30 to 40% of the boxes that hit the home. Actually get recovered 60 up to 60% or 70% is going to landfill or in some cases it's just being combusted for energy. Wow. I get, I hear all the time. The complaints well, my bin's full. I can't fit all these darn corrugated boxes in my bin. What am I supposed to do? And it's a, it's a valid, it's a valid complaint. So there needs to be, in my opinion, a significant change into how how corrugated getta gets recycled and make it easier for the consumer. Yeah. Yes. . Yeah. I mean, yes. So let, let's put things in a, into a context, for instance eCommerce is something everyone can, can probably say yes. eCommerce has been a growing factor. Yeah. But what people don't realize is what that means to the recycling world. Right. So if you go back to 2019 and you just measure the growth from 2019 to through 2021, and we just look at the shipping boxes used for e-commerce. The, the millions of tons that landed on someone's doorstep. Okay. Yeah. Or, or across the country almost literally doubled in two years. Okay. So yeah, our estimates about 1.7 million tons of shipping boxes were used in 2019 in 2021, that number was close to three and a half million tons. Now these are estimates, you know, They're they're fuzzy, but they, they are consistent. Right. So we, we can use that same math over all of the years and we can say, okay, well, it's probably not a hundred percent accurate, but it's accurate enough to, to draw some insight. The interesting thing here though, Cory is that while that number almost doubled a lot of the infrastructure and the processing didn't grow to accommodate it. Yeah. Sometimes it did. but largely it didn't. And some of it even shrank, which yes, makes me very sad because it's not, it wasn't profitable and right. Well, pro so on a residential recycling side, this is, this is the, this is the problem. This is why EPR legislation is coming down. There was recently an article I, I read online about the town of salt St. Marie in Canada. They had spent about 1.4 million in curbside collections. They sold what they collected to generate revenue. They generated about $65,000 in revenue. oh, geez. Wow. So. The, the, the problem is it's very expensive to do these collections. And then once you've collected it, you've spent all this money to do it, and you're never going to recuperate those costs. That's too, that's. Yeah, it has to be efficient. And that's, that's what I was doing at waste 360. You should have seen some of these machines. I hope you go next year. I'd love to, it's incredible. What's happening in the world of waste you know, handling recycling is the, the buzzword and it's, it's pretty cool to, to watch what all these machines get bigger and stronger and faster and more efficient. Mm-hmm . Let's let's hope that changes quickly. Yes. Yeah. Yep. Yeah. Well, very exciting. So. On that note, do you think is, is that town in specific? Are they still recycling? Oh yeah. I, I believe the article did fi it finished with them still recycling, but they were making, they were having to make some changes. There's another article about. Colorado and the, the entire state of Colorado facing in incredible challenges in recycling. Yeah. And while the average recycling rate for paper, they they've estimated in the low 60% range in Colorado. The recycling rate for paper was 27%. And if you factor out OCC, it went down to 11%. Wow. Yeah, there each state is gonna have their own expression of recycling and the challenges that are facing them when it comes to recycling. There isn't, this is a, this is a very hard thing to paint with a broad brush, because there are just so many challenges from, from state to state and even within the state county to county or town. Yeah, that's and that's the point right there, county to county or town to town. I've, I've spoken to a couple people about the issues in Colorado and cities like Boulder have recycling rates, upwards of 67%. Whereas other cities have less than 10% it's the dichotomy is incredible and the, the difference is massive. And why is. Well, it's not convenient. It's not easy. It's not socially acceptable people. Some people don't care. Some people care with all of their heart. so well, and, and for the average person though, their, their altruistic spirit, it might be enough to, to motivate them to recycle. Yeah. But it, it, it's not enough for the average person. Yeah. And, and so I think ultimately, what, what might need to happen is we might need to have redemption centers on some level or right. There's a, there's a company right now that is essentially privatizing or even, I don't know if you would use the word franchising, but what they're able to do is they're able to send you a group of super sacks and you can start your own recycling. I'll say business. Yeah. It could, it could just be for the weekend. It could be your boy scout troop. That's trying to do something in a community, but they send you super sacks. And then as, as a volunteer group, or even if you were trying to do this for, for money, you would sort it and you'd have to make sure the sort was proper. So the plastics were clean that they were separated, you know, number ones, twos, et cetera. Right. And then when you're those sacks are full they'd come and collect them. They'd weigh them and, and essentially give you a receipt. While you're probably not gonna get super rich off of that. Getting money back is better than spending money for it. So right. There are some groups that are looking at it like, Hey, we can do something good for the community and we might make $1,500 doing it. Not a bad trade. I love that. And you've, you've mentioned extended producer responsibility. Do you think that will, I, I could see those, those programs, a program like that being funded by a company that is trying to meet their EPR goals. Does that make sense? Oh, absolutely. I would not be surprised if. There were partnerships. I'm trying to Rena the, is it O Baggo the, the, the, the company that makes the little plastic disks out of the of your single use bags? Is that the name? Oh yeah. I, I don't remember. Yeah, I don't remember. Yeah, but anyway, there are some new innovations coming out that are geared towards more sustainable practices. Whether it be the, the, the little composter. Yeah. The tabletop thing. Yes. I can't remember the name of it, but you know, there's things like that. There's I think it's called O Baggo where it's like this little thing and you put your single use bags in it and it, and it turns it into a little hockey puck, and then you can recycle that it's a little, little easier. So you may see things like that, where there's partnerships and you may see things where a lot of people are talking about how do we utilize the infrastructure for. Box deliveries, whether it be ups or Amazon and, and they, they have a collection route. Yeah. So I think there's a, a lot of discussion about it, but I don't know if there's a solid way forward yet. That's such an efficiency to, to back haul and I love that concept. Yeah. The, the, the problem with the store drop off is that really? No one does it, you know, you go to store and there's bin, well, you and I are you and I are probably the freaks that, you know, we wash our stuff out and we recycle properly and we like, we really nerd out when it comes to it. Yes. But, but the average person. They're not thinking, oh, I'm going to the grocery store. Let me round up all the single use plastics and, and any of the, the stuff that I can recycle and I'm gonna take it and drop it off. If that worked, then you could do the same thing with your corrugated. All of these grocery stores have bailers and from a grocery store's perspective, they're gonna sell that material into the market. Yeah. And get paid for it. So why wouldn't they want that material? But they just know it doesn't work. I, I agree. And I think that's where that extended producer responsibility and, and these, these recycling laws come into into effect nationally you know, Oregon is the first state to have a, a bottle deposit system. Mm-hmm , mm-hmm we have proven that works with now a Tencent deposit for every can, every bottle, every, you know, every container used for a beverage. And yet other states still aren't doing that. I don't understand, you know, why not? It's, it's a lot of work, probably. It's a lot of infrastructure, maybe the , the interest isn't there on at every state, but I could definitely see that coming to more and more states soon and possibly hopefully a national deposit. Well, when, when you have towns, like I mentioned, that are spending millions of dollars to generate. Thousands of dollars worth of recyclable materials. Something has to give right we're spending taxpayer money, or, I mean, even if I were paying for my own recycling outta my own pocket, like it wasn't part of like on my street right now, the county does not pay. It's not part of my taxes. I'd have to pay for that outta my own pocket. But I did the math on it and it's, it works out that I'm paying about $1,200 a to. For them to come and collect something. That's not worth a hundred dollars a ton. I love that you figured that out. So I take it to my local drop off it happens. It happens to be at my kid's school. I'm going to their school almost every day. Anyway. Perfect. Perfect. Yeah. And that makes a lot of sense to have the schools involved and teach the kids how to recycle and how it works. And what's going on with their world that they live in. I'm going on Tuesday. I'm going to speak at my son's class. He's in fourth grade and trying to teach them about recycling and, you know, well, think about how many elementary schools are looking for money. And do lots and lots of fundraisers. Yeah. If they were to, if we were to combine two of these themes where they could privatize their recycling and fundraise at the same time and teach kids about environmental awareness and recycling, this is a marriage made in heaven. Yeah. But it would probably never happen. , you know, I got to meet Tom it was an amazing experience. The, the CEO of, of, of. TerraCycle. And I've been researching more and more what TerraCycle is doing, and they have some really cool programs for, for schools where the, the, the students can win prizes, like big prizes. Mm-hmm if, if they, if they make a huge impact and, and recycle a lot of material. So, you know, that makes sense too. There's a lot of things like that that are available. Yep. We're almost outta time here. What's next for you? What's going on? You're you're gonna travel the world and, and, and speak about corrugating. I mean, yes, I, some of the research I'm doing is new and exciting and people are like, oh, come tell us about it. So, yes, we I'll be traveling around and doing some speaking likely for the rest of the year. But we do have a monthly report. So there's, there's a market analysis that comes out at the last Thursday of every month. And then there's a mid-month report that follows different trends. A lot of this, I just wrote about in our mid month report for may, it was about O and recycling. So I was able to share it was appropriate timing. Good. But you can, you can find us by going to www.green-markets.com. And then you can find the box report from there. And how about you? How do we get in touch with you personally? Yeah, I'm on LinkedIn. You can follow me in my wild BMC collection. for those not in the know BMCs box maker certificate. I love your post . You know, like I, I find these little things on the bottom of boxes and I collect them like baseball cards. so it's fun. There's in the us, there's about 1,150 manufacturing sites. I've got about 120 , so we've got a long way to go. I love. I'd love to see you like frame 'em someday, somehow like you know, pick up the, I want a map right back here. This would be, be a great, great place for a map, but yeah. Put one for every state. Perfect. That would be awesome. Excellent. Well, thank you, sir. I appreciate your wisdom and your friendship and I'm thankful for what you're doing because it's so valuable. I'd like to thank Landsberg Orora for sponsoring this podcast. If you're listening, give us a review. We appreciate it and make sure you're subscribe. So you don't miss the next episode. Thanks so much, Ryan. Thank you, Corey.