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Next Generation Supply Chain – Building The Circular Economy

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Archives, Global Logistics, Global Trade Daily, International Trade

Next Generation Supply Chain – Building The Circular Economy

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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

soybean oil
Archives, Global Trade Daily, News

The Global Soybean Oil Market Continues to Grow Despite Languishing Demand for Biodiesel During the Pandemic

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

The soybean oil market indicates steady growth, despite the COVID-19 pandemic cut demand for biofuel. The competitive price of soybean oil, against the price for sunflower and palm oil, combined with the potential growth in demand for biofuels and increasingly robust environmental standards, signal tangible prospects for the further development of the soybean oil market. 

Key Trends and Insights

USDA estimates that global soybean oil production increased from 58M tonnes in 2019, to 61M tonnes in 2020. China and the USA constitute major producers of soybean oil, increasing output to 17.6M tonnes (+7.1% y-o-y) and 11.6M tonnes (+2.1% y-o-y), respectively.

Global soybean oil exports also remain robust, amounting to 12.6M tonnes in 2020, growing slightly against the previous year. Argentina, a key exporter of soybean oil, increased exports by 800K tonnes y-o-y in 2020, to 5.9M tonnes, despite the 600K tonnes slump in production against 2019. This increase in exports is largely a result of the decline in biodiesel production, necessitating the export of soybean oil that was originally designated for the production of biodiesel. A significant expansion of Argentia’s exports is not envisaged in 2021, due to the strong rate of the Argentine peso, high export duties, and the decline in demand for biodiesel and soybean meal, factors exacerbated by the pandemic.

In February 2021, average export prices (FOB, as monitored by International Grains Council) in the USA, Argentina, and Brazil increased against those in January 2021, reaching $1118/tonne (+$68/tonne), $1078/tonne (+$21/tonne), $1063/ton (+$10/tonne), respectively. From February 2020 to March 2021, soybean oil prices surged from 660-700 $US/tonne to 1000-1220 $US/tonne.

Soybean oil currently maintains a price advantage over its competitors. The average price (Decatur; Average Wholesale Tank Crude) for soybean oil in the USA, according to USDA estimates, stood at $748/ton in 2020-21, while the average price for sunflower oil reached $1,257/ton (Minneapolis FOB).

The global soybean oil market is forecast to develop in the medium term, following an increase in domestic demand in those countries where prices for competing for oil products, such as sunflower oil, remain higher. In the long-term, the potential market growth could be generated by the increased global use of sustainable soybean biodiesel, thereby echoing the Paris Agreement’s commitment to reduce greenhouse emissions.

China to Remain the Main Consumer while India to Lead in Import

The global soybean oil market expanded modestly to $51.2B in 2019, with an increase of 1.6% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

The countries with the highest volumes of soybean oil consumption in 2019 were China (18M tonnes), the U.S. (10M tonnes) and Brazil (8.7M tonnes), with a combined 63% share of global consumption. These countries were followed by India, Argentina, Bangladesh and Mexico, which together accounted for a further 15% (IndexBox estimates).

In value terms, China ($18.4B) led the market, alone. The second position in the ranking was occupied by the U.S. ($8.3B). It was followed by Brazil.

The countries with the highest levels of soybean oil per capita consumption in 2019 were Argentina (53 kg per person), Brazil (41 kg per person) and the U.S. (31 kg per person).

In 2019, global soybean oil imports stood at 12M tonnes, increasing at an average annual rate of +2.3% from 2012 to 2019. In value terms, soybean oil imports amounted to $8.9B (IndexBox estimates) in 2019.

India represented the key importing country with an import of around 3.1M tonnes, which resulted in 26% of total imports. Algeria (876K tonnes) ranks second in terms of total imports with a 7.3% share, followed by Bangladesh (6.3%), China (5%), Morocco (4.6%) and Peru (4.5%). The following importers – South Korea (347K tonnes), Colombia (336K tonnes), Venezuela (320K tonnes), Egypt (228K tonnes), Nepal (198K tonnes) and the UK (187K tonnes) – together made up 14% of total imports.

In value terms, India ($2.2B) constitutes the largest market for imported soya-bean oil worldwide, comprising 25% of global imports. The second position in the ranking was occupied by Algeria ($561M), with a 6.3% share of global imports. It was followed by Bangladesh, with a 5.5% share.

Source: IndexBox AI Platform

trade policy
Archives, Global Trade Daily, International Trade

US Trade Policy – A Tool to Help Combat the Climate Crisis

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A climate crisis is upon us—the scientific evidence is overwhelming. The question is how to respond quickly and decisively on all fronts—at both a domestic and an international level. Carbon pricing is a key mechanism that economists believe is essential to reduce carbon emissions and mitigate climate change. With this in mind, we believe the time has come to harness the power of global trade by using international trade laws to create incentives for a global economy in which the price of carbon is considered in regulating international trade flows. A new administration in Washington provides an opportunity for a more creative approach in which trade policy also serves climate policy. Indeed, President Biden explicitly stated in his climate change platform that “[w]e can no longer separate trade policy from our climate objectives.”

The Biden administration can use existing international trade laws—without delay and without legislation—to take action in response to the global climate crisis. By doing so, the US can lead the way and help shape an international regime that will provide an incentive for companies around the world to price carbon in connection with their operations or face economic consequences at the US border.

Two existing trade remedy laws facilitate such an approach: (1) Section 301 of the Trade Act of 1974 and (2) the countervailing duty law. Together or individually, these laws provide a basis for immediate action creating commercial incentives for responsible behavior by US trading partners. Thoughtful use of Section 301 and the countervailing duty law would be consistent with sound climate policy and ensure that US workers are not disadvantaged by competition with foreign industries that ignore the carbon cost of products they export to the United States.

Section 301 authorizes trade retaliation against “an act, policy, or practice of a foreign country” that “is unjustifiable and burdens or restricts United States commerce.” This broad language should be interpreted as including industrial practices that fail to recognize the cost of carbon in the production of products imported into the United States. For example, the production of steel in China benefits from low-cost, carbon-intensive manufacturing. These unpriced carbon costs disadvantage US steel companies, which compete with Chinese steel imports, no less than other Chinese government policies that directly subsidize the Chinese steel industry. The United States could utilize Section 301 to increase pressure on trading partners such as China and, absent a change in behavior, impose duties to offset the negative impact of carbon-intensive production practices on US industries.

Likewise, the US countervailing duty law is sufficiently flexible to facilitate recognition of the cost of carbon, consistent with other efforts to expand the concept of what constitutes an unfair subsidy. For example, just last year the Department of Commerce revised its countervailing duty regulations to permit currency undervaluation to be treated as a subsidy.  Under this new approach, Commerce recently determined that Vietnam’s currency practices provide an unfair advantage to Vietnamese exporters and justify the imposition of countervailing duties on Vietnamese imports. The simple point is that US trade officials have now recognized that a broader set of foreign government policies are just as pernicious as the traditional subsidization practices that have long been the basis for imposing countervailing duties to protect US workers from unfair foreign competition.

We anticipate that our suggestions could be met with skepticism on the grounds that we are advocating an expansion of traditional notions of unfair trade practices. So be it. We are in a global crisis and business as usual will not do. Our point is to cut through the red tape and bureaucratic delays that have traditionally characterized the federal government’s response to the climate crisis. If nothing else, these trade tools could serve as forcing mechanisms to incentivize more effective international cooperation to fight climate change. Better to act immediately using the international trade tools we already have at our disposal than engage in a lengthy debate over procedure while the jobs and prosperity of US citizens are threatened by imports from countries unwilling to do their part in combatting climate change. There is no time to wait.

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Mark Herlach, a partner at Eversheds Sutherland, is an international lawyer with a practice focused on energy, international trade and defense matters. Mark represents a broad range of clients, including corporations, advanced-technology companies and governments. Emily Rosenblum, an associate at Eversheds Sutherland, is a member of the Energy Group and international trade practice. Emily advises clients on a wide range of regulatory and commercial issues involving international trade.

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Archives, Global Logistics, Global Trade Daily

Reducing Waste and Optimizing Your Supply Chain

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Waste is, well, it’s a waste; and if you’re trying to optimize your supply chain, it can be an expensive waste. There are a lot of sources, both internal and external, which can create waste in your supply chain, like process inefficiencies, communication gaps, lack of or delayed responses, and even errors in ordering or procurement. Whatever the reason, they often end up becoming an enormous waste of time and money, which can be drastically reduced by making supply chain processes more efficient. In fact, most successful companies focus heavily on decreasing waste and reducing wasteful processes.

One of the most effective methods for reducing waste is developing lean methods for supply chain management.

How to reduce waste and optimize your supply chain

Analyze Product Design

One way of not just reducing waste, but also optimizing your production is to examine and re-evaluate your products’ design. Identify any areas or methods to reduce raw material use or replace expensive materials with cheaper ones. If you can shave off small costs, they might result in substantial savings.

You should also evaluate your product packaging options and see if there’s any way you can use cheaper materials.

Manage Resources

Apart from just looking at just using cheaper materials, you should examine each of your production processes to identify which ones are generating waste. Redesign processes that are creating non-recyclable or non-reusable waste. Even recyclable waste should be assessed and you should take the cost of recycling into account.

When you’re optimizing processes, the cost of implementing changes may seem high, but the cost of the waste, as well as associated handling, disposal and even recycling, can add up over time.

Select the Right Equipment

On the topic of handling and disposing of waste, having the right waste management equipment can save time, money and a lot of hassles. We’ve made a lot of advancements in waste management technology and equipment. Trash compactors are a great example of simple solutions to make managing and handling waste much more efficient and save a lot of money over time.

It’s very important to first know how much and what kind of waste your supply chain produces, so start with that. There are a host of solutions, some with very specific uses which you might benefit from.

Improving Production Quality

Quality control is often focused on finished products, but one of the goals of quality management should be minimizing raw material wastage. If you optimize your manufacturing processes to reduce overall waste, it might have a two-fold advantage of increasing the number of goods that clear quality inspection.

Employee Feedback

The employees who have the task with the actual production will probably have a much better idea of where waste is being produced and the challenges with managing it. They could also provide a lot of feedback on how best to reduce waste and optimize waste management.

You can create focus groups tasked with identifying and optimizing waste since this kind of collaborative approach tends to have effective results.

Inventory Management

Lean approaches like JIT (Just-in-time) logistics can help you get closer to a 100% perfect-order measure. Apart from reducing order errors, it can also help you cut down tremendously on a lot of associated costs of inventory management like warehousing, utility costs rentals, and even insurance and taxes.

However, placing multiple orders may increase transport costs and your vendors might charge higher rates if each order is of a lower value, so weigh the pros and cons carefully.

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Erich Lawson is passionate about saving the environment by effective recycling. He has written a wide array of articles on how modern recycling equipment can be used by industries to reduce monthly garbage bills and increase recycling revenue. You can learn more about environment savings techniques by visiting Northern California Compactors, Inc blog.

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Archives, Global Trade Daily, Imports/Exports, International Trade

Qatar’s Strategies Towards Building a Sustainable and Resilient LNG Supply Chain

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According to Exxon Mobil’s Outlook for Energy (2017), the global market for natural gas (NG) should expand by around 45% over the next 20 years with demand for liquefied natural gas (LNG) expected to grow by more than 2.5 times within the same period. Acknowledged as a low carbon-intensive fossil fuel, natural gas is a cleaner, environmentally-friendly, and sustainable option for energy transition that reduces the use of high carbon-intensive fossil fuels, such as coal and crude-oil distillates. Natural gas is also ideal for increasing energy efficiency on the basis that energy release per mass during NG combustion is the highest amongst fuels (fossil- and biomass-based). Moreover, the amount of energy produced from renewables cannot supply global demands for a complete replacement of fossil fuels.

Accordingly, the LNG market is becoming highly competitive with more than 20 countries already supplying customers around the world. Major suppliers currently include Qatar, Australia, Malaysia, Russia, United States, Nigeria, Indonesia, Algeria, Egypt, to name but a few. Increased capital expenditure in the sector is coming and new LNG players are expected to enter the market in the years ahead. These include countries around the Eastern Mediterranean; the United States Geological Survey (U.S. Geological Survey Fact Sheet 2010 – 2014) estimates that the Levant Basin (involving Cyprus, Egypt, Israel, Lebanon, Palestine, and Turkey) contains 122.4 trillion cubic feet of technically recoverable gas.

In such a competitive environment, Qatar managed to maintain its position as the largest LNG exporter in the world (at 77.8mn tons) in 2019 (2020 World LNG Report), and is massively investing to preserve its role as the main global player. Qatar’s future strategies not only include the expansion of production capabilities by around 64% by 2027 to reach 126 million tons of LNG per annum (The Peninsula Qatar, 2019), but also its shipping capabilities through investment in a new fleet of LNG carriers. For instance, on June 1 this year, Qatar Petroleum announced the signing of the largest LNG shipbuilding agreement in history to secure more than 100 ships valued in excess of QR 70 billion to cater for its LNG growth plans (The Peninsula Qatar, 2020). Additionally, Nakilat, the shipping arm of Qatar’s LNG, will significantly increase its current 15% share of the global LNG fleet carrying capacity and will remain the largest owner of LNG carriers in the world for the coming decades.

This strategic investment will propel Qatar from being the world’s largest LNG exporter and producer to a globally-recognized champion of LNG supply chains. As things stand, an LNG supply chain commonly consists of three main links: exploration and production; treatment and liquefaction; and shipping and distribution. Expanding shipping capabilities will definitely strengthen the third link of Qatar’s LNG supply chain, whereas the first two links are already very well established.

By owning and controlling the whole LNG supply chain, Qatar has acquired a significant competitive advantage and moved further ahead of the competition in the LNG market. For instance, by owning independent shipping capabilities on top of well-established production and liquefaction facilities, Qatar will be better prepared and ready to respond to future unexpected risk events. Crucially, the country will also be able to recover quickly from any potential disruptions.

Accordingly, Qatar is building one of the most effective and resilient LNG supply chains in the world. The resilience of the country’s LNG supply chains will also increase international buyers’ trust and confidence in Qatar as a reliable LNG exporter. This reputation will in turn consolidate Qatar’s actual portfolio and help earn new market share. Being seen as a reliable supplier is extremely important in a business environment driven by oil-indexed long-term contracts of 15-25 years. Moreover, being the largest owner of LNG carriers in the world will provide Qatar with a huge competitive advantage in the spot and short-term markets. For instance, the LNG market was traditionally dominated by long-term contracts covering 20-25 years. However, thanks to the emergence of new suppliers and consumers, spot market purchases of LNG have also become a common practice. Indeed, spot and short-term LNG trades made up 32 percent of overall import volumes in 2018 (EnergyWorld, 2019) and are expected to rise over the coming years.

To sum up, by expanding its LNG shipping capabilities on top of its well-established production and liquefaction facilities, Qatar is building a holistic, efficient and resilient LNG supply chain. This will provide the country with a unique and significant competitive advantage in a highly competitive LNG business landscape.

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Dr. Adel Elomri and Dr. Brenno Menezes are Assistant Professors at the College of Science and Engineering, Hamad Bin Khalifa University.

       

This article is submitted on behalf of the author by the HBKU Communications Directorate. The views expressed are the author’s own and do not necessarily reflect the University’s official stance.

timber
Archives, Global Trade Daily, International Trade

WOODEN SKYSCRAPERS PUSH TRADE IN CROSS-LAMINATED TIMBER TO NEW HEIGHTS

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Closer to Nature

American biologist Edward Wilson is known for popularizing the term “biophilia” to explain the inherent pleasure people derive from being in nature. By extension, “biophilic design” incorporates natural materials, natural light, vegetation, nature views and other experiences of the natural world into the modern built environment. A relatively new building material, cross-laminated timber (CLT), is quickly becoming the darling of the biophilic design movement.

CLT is made from layers of dried lumber boards stacked in alternating direction at 90-degree angles, which are then glued and pressed to form solid panels. The resulting panels have exceptional strength, stability and fire resistance. According to a recent USDA study, a seven-inch floor made of CLT is fire-resistant for two hours. CLT structures have proven more resilient to earthquakes than many other types of building materials, fostering great interest among builders in Japan where biophilic design has been part of the culture for centuries. CLT featured prominently in the rebuild of Christchurch, New Zealand, which was severely damaged by earthquakes in 2010 and 2011.

Global Cross-Laminated Timber “Plyscrapers” Reach New Heights

The cross-laminated timber wood panel system was developed in Europe in the 1990s as an alternative to stone and masonry concrete — and to boost employment in the forests products industry. Europe still leads supply and demand in the CLT market, but use of CLT is rapidly gaining popularity in the United States, Canada and across the world.

CLT is the basis of the “tall wood” movement, as the material’s high strength, dimensional stability and rigidity allow it to be used in mid- and high-rise construction of apartment and office buildings and even power line towers. Growing investment in large-scale wood construction is evident with the completion of several prominent structures over the last several years.

They include luxury apartment buildings in Melbourne, Australia and Bergen, Norway as well as the Brock Commons on the campus of the University of British Columbia. Last year, construction began on a 24-story hotel and office tower composed of 76 percent wood in Vienna, Austria. In 2018, Sumitomo Forestry announced its plan to build the world’s tallest wooden skyscraper – at 70 stories tall, the building will be made 90 percent of wood, capable of sequestering 100,000 tons of CO2. Japan also used CLT extensively in its 2020 Olympic National Stadium to achieve a natural aesthetic.

Global Plyscrapers

Building Global Customers

The global CLT market was valued at $773 million in 2019 and was expected to grow to $1.6 billion by 2025. Production of CLT worldwide is estimated based on surveys and reported by the publication Timber-Online at 1.44 million cubic meters in 2019, although data is not available for all production sites. An estimated 65 percent is produced in Italy, Czech Republic, Germany, Austria and Switzerland. With additional production coming online, global annual output is expected to grow to between 2 and 2.5 million cubic meters this year.

How much of this production is traded internationally? It’s not entirely clear. There is no international agreement yet on how to classify CLT on the Harmonized Tariff Schedule. The product currently falls within a broader category with glulam (another laminated timber product), obscuring our understanding of specific trade flows. (With support from USDA’s McIntire-Stennis program, The Center for International Trade in Forest Products at the University of Washington is building a database to better understand international trade in wood products while governments sort this out.)

Japan’s Ministry of Finance recorded 918,000 cubic meters of laminated lumber (glulam and CLT) were imported in 2018, mainly from Europe. U.S. imports of CLT in 2018 were much smaller – less than 20,000 cubic meters, also primarily from Europe. Whether this number will grow remains to be seen – it could be that greater use of CLT drives more trade in architectural design, timber engineering and construction services.

Global ICT market

Image: courtesy of Acton Ostry Architects

Supporting the Structure of Rural Economies

CLT was pioneered and promoted in Europe in part to bolster rural employment in the timber industry. Though it is also traded, being close to construction is a big advantage in the timber industry. European companies, which dominate their own market and supply American developers, are starting to build mills in the United States to meet growing demand. Austrian firm KLH partnered with International Beams in Dothan, Alabama, to open the first CLT plant east of the Rocky Mountains utilizing the Southern Yellow Pine native to the region.

To support more CLT production in rural economies, the United States is in the process of updating U.S. building codes to expand the use of CLT, as the International Building Code has already done. The 2018 Farm Bill contains provisions from the Timber Innovation Act intended to advance domestic research and development of further applications for structural wood in the building sector.

The United States isn’t alone in its efforts to build CLT capacity. Japan’s Forest Agency instituted a road map in 2014 for greater utilization of CLT as a follow up to Japan’s Promotion for the Use of Wood in Public Buildings Act. The agency provides subsidies to drive the establishment of CLT facilities with a target of increasing the country’s CLT production capacity to supply both the domestic and international markets. Through the effort, the government also seeks to support employment of women in rural areas, including through encouraging female lumberjacks.

A Breath of Fresh Air

In responding to industry feedback surveys, customers say wood construction, exposed structural wood and biophilic design have a positive impact on their shopping experience because such structures are ecological, healthful and warm. Some studies even suggest wood is a multi-sensory experience for occupants, evoking a sense of calm that can lower blood pressure.

As for environmental benefits, CLT emits less carbon dioxide during the manufacturing phase and finished buildings made with CLT even help sequester existing carbon for a longer period. Murray Grove in London was the first tall urban housing project to be constructed entirely from CLT. Due to its wooden construction, it was calculated to be carbon negative from the start and will take twenty-one years before the building will even reach carbon neutrality, far less than if the building had used concrete. Even tearing down a CLT building at the end of its life is more environmentally friendly than taking down one made of traditional materials.

oregon-conservation-center-lever-architecture-usa_dezeen_2364_hero2
Photo credit: Lever Architecture, cross-laminated timber community center added to the The Nature Conservancy in Oregon.

Trade in Sustainability

A thriving wood industry must embrace sustainability by replanting and harvesting efficiently. The CLT process allows smaller diameter softwood trees to be utilized, more so than in most commercial timber. It also makes use of millions of acres of pine that have been killed by the pine beetle epidemic. Pine beetles have penetrated forests in all nineteen western states, some eastern states and Canada, effectively decimating some 88 million acres of timber. Processing the downed trees mitigates some of the carbon emitted by the decaying wood, which remains strong enough to be useful in CLT processing for up to two years.

Cross-laminated timber provides many possible benefits, including reduced costs, rural employment, strength, fire-resistance, beauty and a sense of being closer to nature. We can also credit trade in CLT with stimulating a global movement that could help all of us live and work more harmoniously on this planet.

The author began her U.S. Government career in the U.S. Department of Commerce, International Trade Administration’s Forest Products division and is still convinced this industry has the best site visits and field trips.

Feature image: The Kajstaden Tall Timber Building by CF Møller Architects in the Swedish city of Västerås.

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Sarah Smiley is a strategic communications and policy expert with over 20 years in international trade and government affairs, working in the U.S. Government, private sector and international organizations.

This article originally appeared on TradeVistas.org. Republished with permission.

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Archives, Global Trade Daily, Special Reports

Businesses Must Adjust To Climate Change; 5 Ways Toward Sustainability

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As climate change causes worldwide concern and prompts calls for governmental action, consumers are putting the onus on businesses to step up their sustainability standards and practices.

A Nielsen survey, for example, showed that 81 percent of global consumers feel companies should help improve the environment. And with governments across the globe struggling to reach an international consensus on climate change, close observers of business and the environment, along with a high number of CEOs, agree: Private industry should take the lead in driving sustainability.

“Some forward-looking companies are seeing it’s an issue they can no longer ignore, morally and economically, and that you can go green and succeed in business,” says Hitendra Chaturvedi (www.hitendrachaturvedi.com), a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and expert on global supply chain sustainability and strategy.

“Business strategies must include sustainability in their core beliefs and practices. Part of the problem is that they are missing the simple, sensible ways that can drive sustainability and bring a return on investment at the same time.”

Chaturvedi suggests the following ways businesses can exercise sustainability practices to help fight climate change and connect with consumers:

Find the facts. “When a package gets delivered to you by an online commerce company, most people see the packaging as mainly contributing to the pollution, but that is not the case,” Chaturvedi says. “The packaging contributes less than 5%, but the main culprit is the returned/defective item which accounts for close to 50% of the pollution because it is not properly disposed of. I call it sensible sustainability. Identify and focus on low-hanging fruits.”

Seek education. “Finding the facts brings an important issue – education of consumers,” Chaturvedi says. “I see too many data points floating around that are put forth to create hysteria and are flat-out wrong, causing well-intentioned people to be waylaid in unproductive directions. Too many times this causes even a well-wisher of the environment to lose interest. We need a proper way to educate consumers about what is real and what is fake news.”

Implement business model changes. “Look at your business model holistically,” Chaturvedi says. “I propose a 5R model that simply, sensibly, and holistically integrates forward and reverses supply chain within any organization to ensure reduction in waste – and without sacrificing profits or competitiveness.”

Embrace technology. “It will lead to quick solutions to many vexing sustainability problems,” Chaturvedi says. “For example, advancement in technology has given us economically viable micro-factories to processing plastic waste, something that was not possible a few years ago. Now we can package it into a business model and scale it. Technologies like blockchain and dendrites will have far-reaching effects on sustainability as they will drive tracking and accountability.”

Find sensible solutions. “Sustainability needs sensible solutions, not a panacea, not motherhood and apple pie solutions,” Chaturvedi says. “We need solutions that are practical and profitable. We see many solutions that promise to solve the world’s pollution problem but are either one-off, or do not make money or both. We need businesses to step in and partner with scientists, universities, and government so a practical/viable perspective can be applied to sustainability solutions. A business will bring that perspective along with what can scale and what can not.”

“Businesses can see significant benefits, both economically and socially, from incorporating sustainable practices,” Chaturvedi says. “Some of the steps you incorporate can seem small at first, but day by day those efforts will produce great results.”

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Hitendra Chaturvedi spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainability in supply chain, reverse logistics, ecommerce, artificial intelligence and machine learning. Now a professor at Arizona State University, Chaturvedi has been a visiting professor at Southern Methodist University, University of Texas-Dallas, Penn State and Purdue.