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Next Generation Supply Chain – Building The Circular Economy

circular economy

Next Generation Supply Chain – Building The Circular Economy

It might be dismaying, if not shocking, to learn that humanity’s demand for natural resources far exceeds what the planet is capable of regenerating. We currently consume the equivalent of around 1.7 earths every year. With global demand increasing, it is expected by 2050 that we will need the equivalent of 3 earths. Our current resource consumption rates are obviously unsustainable, and if we continue on our current trajectory, we’ll inevitably deplete all of the planet’s resources.

As the global population continues to grow and the demand for goods increases in-kind, there’s mounting pressure on companies to produce more, and more quickly, in order to stay relevant. To meet this fevered demand, humanity has relied on linear ‘take‑make‑waste’ supply chains and disposable-economy models. Products get thrown away and become landfills. Yet more are produced to meet an ever-growing need.

Electronic equipment waste, in particular, represents one of the most glaring threats to our planet’s long-term stability. The United Nations estimates that the current 53 million tonnes of e-waste generated every year will double by 2050, making it the world’s fastest-growing waste stream. Likewise, global plastics production currently totals over 360 million metric tons per year. 50% of those are single-use plastics–they’re produced, used once, and thrown away. The cumulative total of plastics produced is now over 8-billion tons worldwide, with around 10 million of those tons ending up in our oceans each year.

It’s time for the disposable, ‘take-make-waste’ economy that humanity created to change. To slow down the wanton consumption of earth’s natural resources, stop plastic pollution and raw-materials waste, we need a circular economy that works for all of us. The good news is, steps are being taken toward just such a model.

Slowing Down the Natural Resource Consumption Rate

Manufacturers need to reduce the consumption of natural resources by recycling raw materials from end-of-use products and reconditioning or repurposing their components for use in new products.

By using digital and IoT technology, for example, manufacturers can empower consumers and employees to monitor the usage, performance, and overall integrity of factory or household equipment. Sensor technology can help predict problems and equipment failures, facilitate proactive maintenance, and ensure equipment remains viable at critical junctures.

Products will need to be designed with both end-of-use and remanufacture in mind. This requires designing-in processes for disassembly to reclaim raw materials and components that can be reconditioned, reused, or remanufactured.

When products are no longer viable, AI and robotics technology can salvage useful remnants from those products. For example, Apple uses a robot [Daisy] to disassemble iPhones to reclaim and conserve high-quality and precious materials in an energy-efficient way. Daisy dismantles 200 iPhones per hour and methodically places collected materials in appropriate containers. By using digital technology, manufacturers can assess returned products and materials for refurbishment, re-manufacture, or resale at a relatively low cost, and by keeping the same materials in circulation longer, they’ll constrain the rate of natural resource consumption.

Recovering End-of-Use Products for Remanufacture

Manufacturers need to increase the probability of recovering end-of-use products in order to reuse components or reclaim raw materials for new products.

To that end, they can offer direct-to-consumer, subscription-based ‘Product-as-a-Service’ mechanisms that use sensor technology to monitor product consumption and usage up until end-of-use. The manufacturer can then provide the consumer with an automated direct replacement of the product while collecting any vessels, cartridges, or containers for reincorporation in the manufacturing process.

In this scenario, the manufacturer’s reduced consumption dovetails with them gaining better insight into the consumer’s product experience by understanding the frequency of use in demand/replacement cycles.

Removing intermediaries in the supply chain can also provide greater value to the customer. Getting rid of middlemen costs less and ensures new products arrive directly at your door when you need them.

Industrial Symbiosis

Industrial symbiosis is the process by which waste or by‐products from one company or industry become the raw materials for another. The waste or by-product can either be donated or sold to another company allowing the resources to then be monetized and reused. Moving materials and resources between different companies and industries is key not just to creating a circular economy, but also to ensure the best possible use of natural resources.

Leveraging Technology and Making Circular Economies Happen

All of the above scenarios can reduce natural resource consumption, increase raw material productivity and lifecycles, and reduce manufacturing costs. Whether it’s via extending the life of mechanical and electronic appliances through remote performance monitoring, providing products direct-to-consumers with a system for reclaiming unwanted containers and cartridges, or improving the speed of disassembly and raw material reclamation for reuse, digital technology plays a pivotal role in making that reality.

The provenance and flow of components, products, and materials through supply chains to their end-of-use needs to be transparent. Unique identifier technologies such as cryptographic anchors, molecular DNA tags, or RFID tags can be applied to the surface of a component or product, or embedded into raw materials, to gather data on how wasteful a given supply chain is. Using these unique identifiers in conjunction with blockchain not only authenticates the provenance and origin of components and materials, it also provides location-based information for tracking and tracing product conditions.

Leading organizations are now focusing their efforts on using technologies to enable the transition to a circular economic model. Technologies such as IoT, predictive and prescriptive analytics, 3D printing, AI and machine learning, blockchain and digital twins, all have an essential role to play in this transition.

Products-as-a-Service

To further encourage the paradigm shift toward a circular economy necessitates a change in how we think about product acquisition. The motor industry offers drivers the opportunity to lease their cars with the option to buy after some certain period of time has passed. This ‘Product-as-a-Service’ leasing model is now being adopted by other manufacturers. Instead of purchasing a washing machine you can lease one. A consumer can enter into a contract with the manufacturer based on an agreed number of individual washing cycles or time, and be billed monthly. At the end of the contract, the manufacturer collects the machine and replaces it with a new one and a new leasing contract, or just takes the machine away for the consumer to consider other competitive leasing options. Either way, the machine is back in the hands of the manufacturer, who can now refurbish the machine for reuse.

During the consumer’s use of the machine, the manufacturer can not only monitor its usage, but also its integrity. Using IoT sensors and predictive analytics, the manufacturer can keep an eye on the health of the machine and recommend that the user proactively replace a given component before it breaks.

There are many examples of where ‘Product-as-a-Service’ and leasing models are becoming more commonplace by using digital technology to enable the provision, service, and financial arrangements. This is just one area where the industry is evolving to meet the moment, but an important one, and it illustrates how radically manufacturers can rethink their business models if they are so motivated. Moving to a more sustainable, less wasteful business model doesn’t have to mean a net loss for companies. If anything, the available examples seem to suggest that such transitions will open up unforeseen opportunities for new revenue streams and technological innovation. Far from being a zero-sum proposition, the conservation of raw materials and resources, it seems, can be of benefit to both consumers and manufacturers.

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 Tim Adams is an Executive Partner at Theorem

global trade plastic bottles

The U.S. Plastic Bottle Market to Struggle With the Pandemic and Rising Environmental Concerns

IndexBox has just published a new report: ‘U.S. – Carboys, Bottles And Similar Articles Of Plastics – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2019, the U.S. plastic bottle market increased by 0.1% to $11.5B, rising for the third consecutive year after two years of decline. Over the period under review, consumption recorded a relatively flat trend pattern.

Since plastic bottles are used in many sectors of consumer goods, the market is affected, on the one hand, by an increase in the population and its income, and on the other hand, the general dynamics of the economy and industrial production also constitute key fundamental factors.

In general, the food and beverage industry maintains modest but robust growth, driven by rising population and their incomes, which will remain the key positive fundamental factor behind the plastic bottle market growth. A moderate increase in production growth is forecast in the soft drinks segment, thereby shaping the possible growth of plastic bottle consumption. Moreover, the non-alcoholic beverages segment remains least competitive with alternative packaging materials. As a rule, soft drinks do not require long-term storage, therefore the possible advantages presented by glass packaging alternatives remain irrelevant for this market. Moreover, the relatively low cost of plastic bottles and their minimal weight make them a suitable option for beverage manufacturers.

However, since this market is well-established and saturated, there are no prerequisites for a sharp increase in the consumption of soft drinks. Moreover, an increasing number of consumers are paying attention to their health, which contributes to a slowdown in the consumption of sugar-based drinks. In terms of plastic bottle consumption, this may be relatively offset by the rising consumption of other types of drinks like mineral water.

A similar situation is also relevant for personal care products – in general, household incomes in the U.S. are relatively high, and the consumer goods markets are saturated, making a sharp increase in consumer demand unlikely. Recently, however, growth in consumer goods consumption has been hampered by a slowdown due to trade tensions with China, which could lead to a reduction in cheap imports and an increase in the prices for consumer goods.

Market Forecast to 2030

In early 2020, the global economy entered a period of the crisis caused by the COVID-19 epidemic, due to which most countries in the world put on halt production and transport activity. So far, the uncertainty regarding quarantine measures and the depth of the global economic decline is too great to make reliable forecasts. IMF states that even a short-lived outbreak would lead to at least a 3% contraction of the global GDP. The U.S. is expected to face an even deeper short-term recession, with the contraction of GDP of approx. -5.9% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation.

In the medium term, should the pandemic outbreak end in the second half of 2020, the economy is to start recovering in 2021 and then return to the market trend of the gradual growth, driven by the fundamentals existed before 2020 and boosted by support measures imposed by the government. Driven by rising demand for plastic bottles in the U.S., the market is expected to start an upward consumption trend over the next decade. The performance of the market is forecast to increase slightly, with an anticipated CAGR of +0.4% for the period from 2019 to 2030, which is projected to bring the market volume to 3.2M tonnes by the end of 2030.

Plastic bottles as a product appear to be not very sensitive to the quarantine closure of the HoReCa sector since drinks are rarely sold in plastic bottles in restaurants and cafes. A much greater risk comes from a possible change in consumer habits – due to the risk of infection, consumers tend to visit shops much less frequently which also leads for a decrease in the number of impulsive purchases; together those factors may lead to reduced consumption of soft drinks and beauty products. In addition, amid increased attention to health, consumers can drink less sugar-based drinks in favor of products positioned as more “healthy”.

A more noticeable decrease can occur in the segment of chemical and construction containers, containers for fuel and lubricants. As the demand for trips fell sharply, the need for vehicle maintenance also contracted, which in turn reduces the demand for plastic containers for related products. In the construction sector, there may also be a moment of uncertainty due to reduced income for potential home buyers – this, in turn, may also lead to a decrease in the consumption of plastic bottles for construction-related products.

On the other hand, the pandemic leads to an increase in the consumption of detergents and disinfectants, which are packaged in plastic bottles in large quantities. This contributes to an increase in the demand for plastic containers for these products, although here plastic bottles may face competition from soft plastic containers, especially for bulk packaging.

Additional risk comes from the fact that plastic container consumption has recently started to slow down due to environmental concerns. The problem of plastic pollution is an acute problem worldwide, and many countries are trying to limit the consumption of plastic. Thus, in the EU, a ban was introduced on the use of disposable plastic utensils, and restrictions were imposed on the growth of consumption of non-recycled plastic bottles. In the U.S., there were also attempts to ban plastic products, but they have an effect only in individual states. Thus, California, New York, and hundreds of municipalities in the U.S. ban or fine the use of plastic. Some other states, however, refused to restrict the use of plastic packaging thereby letting it be the consumer choice.

Despite the fact that restrictive measures apply primarily to plastic bags and disposable tableware, these concerns could potentially benefit the alternative packaging market. Moreover, rising demand for “natural” and “healthy” drinks also promotes alternative glass bottle consumption, as it benefits from its ‘environment-friendly’ image among consumers. In response, plastic bottle manufacturers are increasing the use of recycled plastics and expanding the use of biodegradable plastics. In the medium term, it is expected that the struggle for and against the use of plastic will generally balance each other out, and a sharp reduction in the use of plastic bottles is unlikely.

Given the above-mentioned factors, the performance of the market is forecast to decrease slightly in 2020 and then to start a slow upward trend. Overall, the market is expected to rise with an anticipated CAGR of +0.2% for the period from 2019 to 2030, which is projected to bring the market volume to 3.1M tonnes by the end of 2030.

Imports into the U.S.

In 2019, approx. 224K tonnes of carboys, bottles and similar articles of plastics were imported into the U.S.; shrinking by -5.3% compared with 2018. The total import volume increased at an average annual rate of +1.0% from 2007 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations in certain years. In value terms, plastic bottle imports dropped modestly to $1.2B (IndexBox estimates) in 2019.

Imports by Country

Canada (64K tonnes), China (53K tonnes), and Mexico (53K tonnes) were the main suppliers of plastic bottle imports to the U.S., together comprising 76% of total imports. These countries were followed by Turkey and Taiwan which together accounted for a further 7.8%.

From 2007 to 2019, the biggest increases were in Turkey, while purchases for the other leaders experienced more modest paces of growth.

In value terms, the largest plastic bottle suppliers to the U.S. were China ($385M), Canada ($285M), and Mexico ($196M), with a combined 71% share of total imports. Taiwan and Turkey lagged somewhat behind, together comprising a further 4.2%.

Import Prices by Country

The average plastic bottle import price stood at $5,415 per tonne in 2019, growing by 2.7% against the previous year. Over the period from 2007 to 2019, it increased at an average annual rate of +3.1%. The pace of growth appeared the most rapid in 2008 when the average import price increased by 16% y-o-y. Over the period under review, the average import price attained the maximum in 2019 and is likely to see steady growth in the near future.

Prices varied noticeably by the country of origin; the country with the highest price was China ($7,236 per tonne), while the price for Turkey ($1,819 per tonne) was amongst the lowest.

From 2007 to 2019, the most notable rate of growth in terms of prices was attained by China, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox AI Platform

styrene

Global Styrene Trade Continues to Decline, with Exports Estimated at $11.5B in 2018

IndexBox has just published a new report: ‘World – Styrene – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

Global Styrene Trade 2013-2018

In 2018, approx. 9.4M tonnes of styrene were exported worldwide; a decrease of -8.6% against the previous year. In general, styrene exports continue to indicate a significant decline. Over the period under review, global styrene exports reached their maximum at 11M tonnes in 2013; however, from 2014 to 2018, exports remained at a lower figure.

In value terms, styrene exports amounted to $11.5B (IndexBox estimates) in 2018. The most prominent rate of growth was recorded in 2017 with an increase of 17% against the previous year.

Exports by Country

In 2018, the U.S. (1.8M tonnes) and the Netherlands (1.8M tonnes) were the major exporters of styrene across the globe, together recording near 38% of total exports. Saudi Arabia (1,073K tonnes) took an 11% share (based on tonnes) of total exports, which put it in second place, followed by South Korea (9%), Canada (6.9%), Singapore (6.8%), Japan (6%) and Taiwan, Chinese (5.7%).

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Canada, while exports for the other global leaders experienced more modest paces of growth.

In value terms, the largest styrene supplying countries worldwide were the Netherlands ($2.2B), the U.S. ($2.1B) and Saudi Arabia ($1.2B), together comprising 48% of global exports. These countries were followed by South Korea, Singapore, Japan, Canada and Taiwan, Chinese, which together accounted for a further 35%.

Export Prices by Country

The average styrene export price stood at $1,227 per tonne in 2018, surging by 2.7% against the previous year.

Average prices varied noticeably amongst the major exporting countries. In 2018, major exporting countries recorded the following prices: in Singapore ($1,312 per tonne) and South Korea ($1,304 per tonne), while Canada ($1,117 per tonne) and the U.S. ($1,128 per tonne) were amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Japan, while the other global leaders experienced a decline in the export price figures.

Source: IndexBox AI Platform

food supply chain

Reusable Plastics: The Unsung Heroes Of The Food Supply Chain

When you think of plastic, you probably think of piles of landfill products that don’t decompose organically, and as a result, end up languishing in the ground leaching toxic chemicals into the soil.

Modern technology has meant that plastics are more than just the straws you put in your milkshake or the wrapper on your lunchtime snack. Today’s plastics come in all shapes and sizes, including reusable, durable products used across the food supply chain market.

These products make food supply chain management more cost and time-efficient, allowing consumers to enjoy fresh, delicious produce and products quickly, and at a price they can afford.

Growing And Harvesting

In the early stages of food production, agricultural reusable plastic containers are used to grow fruits and vegetables in a safe and sanitary environment. Plastic trays are used to grow seedlings, and these are often watered using reusable plastic irrigation systems. Greenhouse covers, also made from reusable plastic, make growing plants that need climate-controlled housing, such as tomatoes or citrus fruits, safe and hygienic.

When it comes to harvesting product, plastic containers make it easier for farmers to store and transport their crops safely. Cardboard or wooden pallets can be hard to sanitize and are prone to absorbing moisture, while plastic is non-porous and can easily be cleaned after each use.

Processing and Distributing

Processing fresh produce, including fruits, vegetables and other crops, involves sorting them ready to be shipped off for use in various products such as ready meals, sauces and canned goods. Some will be sold whole, but the majority will meet customers in various different forms, so they are sorted and stored in a selection of reusable plastic food handling containers, such as IBCs, prior to being distributed to factories and stores.

Distribution is the part of the supply chain where single-use plastics get involved. The products can be transported on plastic pallets and crates, which are reusable, but they are delivered to customers in single-use packaging. As DeMaso of Lipman Family Farms explains:

“Single-use plastic is hard to get rid of when sending to consumers in the produce industry. We need to make sure food safety and sanitation are on-point, so we’re not trading contaminants. Disposable plastic is a problem, [so] it’s a matter of making sure we are using as little as possible.”

Making the Food Supply Chain More Sustainable

As this article highlights, the main issue the food supply chain faces when it comes to sustainability is its reliance at the end of the process on single-use plastic packaging. Justin Bean, the Business Development and Sales Manager at Reusable Transport Packaging, believes that reusable food packaging is the future, and that food producers should embrace it throughout their supply chain. This approach will help to reduce the food supply chain’s reliance on single-use plastics.

“Farmers still spend a lot of money on single-use corrugated and or single-use plastics for distribution to retailers. Our pay per use or milkman model allows users to cut out single-use packaging waste, save money, and use a better RTP (Reusable Transport Package).”

A move towards reusable plastic packaging throughout the food supply chain will allow the market to reduce its impact on the environment and still keep food fresh and affordable. It’s safe to say that these revolutionary products are the future of the food supply chain.

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Reusable Transport Packaging is a re-seller, master distributor, and custom manufacturer of the broadest range of returnable and reusable plastic packaging available today. We carry thousands of products and boast an inventory that is readily available, with national and international coverage.

ExxonMobil-SABIC JV

Savage Selected as Partner for ExxonMobil-SABIC JV Rail Project

San Patricio County, Texas can expect to see the completed ExxonMobil-SABIC JV Rail Project facility as early as 2021, according to information released this week confirming global partner Savage, as the partner of choice behind the design, development, and operations of the facility.

The rail facility is the product of the joint venture, Gulf Coast Growth Ventures (GCGV), between ExxonMobil and SABIC and will handle railcars transporting plastic polymer, polyethylene. The facility will be completed in San Patricio County, Texas, next to the GCGV facility.

“We’re excited to partner with GCGV on rail infrastructure and operations to support what will be a world-class petrochemical facility,” said Savage’s Energy and Chemical Sector President, Brad Crist. “Our nearly two decades of handling plastics and working with major industry producers, coupled with our extensive rail experience, enable us to design this rail facility from an operator’s perspective to ensure it functions safely, efficiently and reliably without impact on the surrounding environment.”

Savage currently boasts a network of 50+ rail terminals currently under its operation. The company provide support with services including rail switching and indexing, railcar washing and loading, railcar repairs and facility maintenance in addition to designing and building the ExxonMobil-SABIC JV rail facility.

“This project is an example of how we can bring our diverse rail, logistics, engineering and facility operations capabilities together to create value for our Customers,” said Kirk Aubry, Savage President and CEO. “It’s the quality of our people, our solutions and our consistency delivering results that truly makes us distinctive in the markets we serve.”