The future of retail and e-commerce

The Canadian retail industry is undergoing massive change, shedding bricks and mortar for the new exciting world of e-commerce. In the driver’s seat are consumers. Click and point with the mouse. It’s so easy. In today’s world, convenience is king.

But what’s the impact on the retail trade? What happens to those huge store fronts, the money tied up in real estate, those massive parking lots, those attractive consumer-friendly displays of merchandise that aren’t needed any more? What about data and transaction technology, and logistics?

And then there’s the supply side. The potential is staggering. Amazon’s retail segment in the US and corrugated box-related consumption, for example, is currently growing at an amazing <em>30% year-over-year.</em> Mostly in electronics and appliances, entertainment and leisure products.

So far, the market for at-home grocery items has hardly been touched. “Somebody will find a way to crack the grocery nut,’’ said Matt Elhardt of Fisher International recently. “I might buy a new TV once every couple of years, but I buy groceries every week. In terms of where the real opportunities are, I would make the argument that we’re at the tip of the iceberg.’’

Canadian retailers sure want some of that iceberg. Several have already launched e-commerce ventures or are positioning themselves to take advantage of the new opportunities.

There are implications for packagers further down the line as well. Operators of material recycling facilities or MRFs have already noted the change in colour of their surroundings: from the once dominant grey of old newspapers to the now dominant brown of corrugated boxes.

If you want to learn more on the future of retail and e-commerce in Canada, we’ve lined up the perfect occasion. Come hear Diane Brisebois, President of the Retail Council of Canada, talk about the major challenges and opportunities facing Canadian retailers as e-commerce takes hold. For more details and to register for this PPEC event on April 11, click  here .

 

Packaging stewards should be rewarded for using recycled content

Recycled content is central to the “Circular Economy” approach that Ontario and some other provinces say they want to adopt. It keeps raw materials flowing through the economy longer, reduces the pressure to extract more virgin materials from the earth, and delays their eventual disposal as waste. It’s something which governments say they want to encourage, and for which stewards of paper products and packaging should be rewarded.

The Canadian paper packaging industry has spent millions of dollars over the years investing in cleaning and screening machinery so that it can re-use and recycle recovered paper. Packaging mills in Southern Ontario led North America in recycling old boxboard for the first time back in the 1990s. Today, some 94% of Canadians can recycle it. And today, most of the corrugated boxes and boxboard cartons made in Ontario are continuously made from 100% recycled content, a circular achievement in and of itself.

The paper packaging industry gets no credit for this effort, while in the commercial marketplace it competes against mostly virgin packaging alternatives. We have suggested the province level the playing field by setting a target of 40% average recycled content for all packaging sold in Ontario by 2020 and an average of 70% within 10 years. This would place Ontario firmly on the path to the circular economy it says it wants, and create a more level playing field between materials at the same time.

An alternative to provincial regulation is a recycled content credit within the Blue Box funding formula itself. This is not a new suggestion. The producer responsibility organisation in Quebec, Éco Entreprises Québec, already has one. And while Stewardship Ontario does float the idea of a recycled content credit in the draft outline of the new Blue Box plan it is currently working on, its support seems rather tepid.

That’s because some Ontario stewards have objected to the concept in the past. Here are three historical objections, and our responses to them.

  1. That assessing recycled content is an administrative burden and costly to track and report.

We think this objection is way overstated. For paper materials we have independent third-party certifiers and chain-of-custody certifications as to where paper materials are coming from, whether from virgin or recycled sources, or a mix of the two. Chain-of-custody certification is an environmental metric supported by the global Consumer Goods Forum, of which most leading Canadian brands and retailers are members.

Making suppliers prove that they have internationally accepted chain-of-custody certification would seem to reduce the administrative burden on stewards and provide a good kick-start to the circular economy at the same time. It would also force other materials to develop chain-of-custody certification programs if they haven’t already done so.

Or stewards could use independently certified industry averages. PPEC has been tracking its members’ use of recycled content for over 25 years and it’s quite willing to open its books to a confidential third-party review. A sliding scale of recycled content usage would reward a lot more stewards and probably be more palatable and make any administration easier. Besides, won’t the new body Ontario has created to bring in the Circular Economy (the Resource Productivity and Recovery Authority) be monitoring this anyway?

  1. The funds to credit stewards using recycled content must come from other stewards (i.e. it is cross-substitution).

Well yes, it is. That’s why you do it, to encourage other stewards to be more circular, to reduce the overall environmental burden of the basket of goods that is the Blue Box, for the common benefit. This is the very same principle that’s supposed to apply to those materials that are recycled through the Blue Box versus the ones that are not. What’s the difference? It’s the same principle of rewarding preferred behaviour.

  1. Federal regulations limit the use of recycled content in food-contact packaging. Making recycled content a requirement would be unfair to those stewards.

First, federal regulations on food-contact packaging apply to all materials (i.e. it is material-neutral). Second, recycled content is not excluded. Food safety is the key issue and the onus is on the brand owner to guarantee food safety, whether through Health Canada “No Objection Letters” or through FDA approvals. It comes down to the material’s direct and indirect contact with the food and the element of risk to humans.

Is it unfair to single out “food” stewards?  No. They choose to be producers of foods and the safe delivery of food is part of that. Just as a producer of a washing machine or a microwave is “forced” to use a large package to have his or her product delivered. Or a perfume manufacturer with an elaborately designed stand-out boxboard carton. All choose of their own free will to be in those lines of business. That’s the game they’ve chosen to be in. Whether they can use recycled content or not in their delivery packaging is part and parcel of that original choice.

In summary, rewarding those who use recycled content is a good, fair, and effective way to achieve a circular economy and to level the playing field between “circular” and “non-circular” performers. Isn’t that what we’re supposed to be doing?

Les cibles de l’économie circulaire doivent tenir compte du contenu en matières recyclées

Le ministère ontarien de l’Environnement et de l’Action en matière de changement climatique (MEACC) se penche actuellement sur ce qu’il appelle les objectifs spécifiques de « gestion » des matières recueillies dans les boîtes bleues, comme le papier, le plastique, le verre, l’acier et l’aluminium. Le ministère a déjà indiqué qu’il souhaite voir le taux collectif de récupération des boîtes bleues atteindre 75 %, alors que le taux actuel est de 64 %.

Avant d’examiner en détail les cibles précises pour les différentes matières, nous devons nous préoccuper d’un enjeu important qui concerne directement l’économie circulaire à laquelle le ministre et la province disent vouloir se rallier, c’est-à-dire la question du contenu en matières recyclées. L’utilisation de contenu recyclé permet de faire circuler les matières en boucle aussi longtemps que possible.

La majeure partie des boîtes de carton ondulé et du carton pour boîtes fabriqué en Ontario, par exemple, est déjà faite à 100 % de matières recyclées, à partir de boîtes et de papier recueilli après usage dans les usines, les supermarchés, les bureaux et les hôpitaux, ainsi que dans les boîtes bleues et les centres de recyclage. L’industrie ontarienne des emballages de papier et de carton a franchi cette étape importante après avoir investi pendant de nombreuses années des millions de dollars en nouveaux équipements de nettoyage et de classement. En effet, les usines du sud de l’Ontario ont tracé la voie en Amérique du Nord en intégrant le vieux carton issu de la collecte domestique à leurs pâtes de carton recyclé dès les années 1990. Aujourd’hui, quelque 94 % des Canadiens peuvent recycler le carton.

Le Conseil de l’environnement des emballages de papier et de carton (CEEPC) a suivi et largement fait connaître au public les progrès de l’industrie vers une économie plus circulaire. Cependant, ses membres se retrouvent en concurrence sur le marché avec des matériaux vierges qui ont fait très peu de progrès vers l’augmentation des matières recyclées ou la « circularité ».

Le secteur du plastique, par exemple, ne publie pas de données sur le contenu moyen en matières recyclées à notre connaissance et le taux de réacheminement global des matières plastiques dans les boîtes bleues est franchement faible (32 %). Le pourcentage de réacheminement de la pellicule de plastique est passé de 6 % à 12 % au cours des 13 dernières années, et celui du polystyrène de 3 % à 6 % pendant la même période.

Pour faire en sorte que les règles du jeu soient justes entre les différentes matières, nous avons besoin de politiques publiques qui encouragent une plus grande utilisation des matières recyclées ou une certaine reconnaissance des résultats obtenus en ce qui concerne les matières recyclées dans la formule de financement des boîtes bleues et les objectifs de rendement. Nous n’observons rien en ce sens actuellement et les emballages de papier et de carton font encore face à la concurrence grandissante des plastiques vierges moins coûteux. Pourquoi la province n’établirait-elle pas un objectif de 40 % de contenu moyen en matières recyclées pour tous les emballages vendus en Ontario d’ici 2020, et de 70 % d’ici 2027? Cela nous mettrait sur la voie d’une économie plus circulaire en plus de créer des règles du jeu plus équitables.

Fact and fiction in the fight to deliver your fruit and veggies

Most consumers don’t see this but there’s an intense battle going on right now in North America for the job of delivering food from the farm to the retailers who sell it to you. An old ding-dong fight between the traditional corrugated box with its colourful graphics showing who grew the produce, and the anonymous reusable plastic crate. Between a system that uses a fresh box every time (minimising the potential for undesirable pathogens and bacteria being carried forward to the consumer) and a crate that must be thoroughly washed and sanitised before it can be used again. An economic and environmental debate between paper and plastic, re-use and recycling.

A recent article in the Globe and Mail newspaper highlighted some of the issues. But it also added to the confusion. Here’s our attempt to sort fact from fiction:

  • Claim (by major crate supplier IFCO) that the scientific studies showing food-safety risks with reusable crates are “flawed” and rely on “faulty methodology.”

FACT:  Several independent studies by reputable food scientists have now been carried out over the last few years in both Canada and the United States, including by the Universities of Guelph, British Columbia, California (Davis) and the University of Arkansas. At least one has been peer-reviewed and published in a scientific journal. The studies range from a lab simulation that shows biofilms surviving common crate cleaning procedures to in-field tests revealing unacceptably high total aerobic and yeast and mould counts, and the presence of E. coli after the crates had supposedly been washedIn the Globe article, a food science professor at McGill University, Lawrence Goodridge, throws his support behind the latest University of Guelph findings.

FACT: IFCO by comparison has not funded any independent research or presented the results of  any in-house studies for public review; has declined to provide details of the standards it deems to be acceptable; and has responded to the data in the above studies only with general and critical sound bites. If its crates are so clean why is IFCO unwilling to share publicly exactly how it draws those conclusions? And why aren’t retailers like crate promoter, Loblaw, and government inspection agencies, putting more pressure on IFCO to share those testing procedures publicly so that food scientists and consumers can be confident that the crates meet acceptable sanitisation standards?

  • Claim (by the Reusable Packaging Association) that the corrugated industry has funded tests on the safety of its competitor’s products but not its own.

FACT: Not true. The corrugated industry has been very open in commissioning independent food scientists to do the crate studies noted above. It had hoped that IFCO and government bodies might fund some joint research on both crates and boxes, but neither party came to the table. It has also tested its own product’s performance. One independent box study shows that the heat of the process of making the box kills all bacteria. Another study tested 720 corrugated boxes in three different US states, and found that every single one of them met acceptable sanitisation levels.

  • Claim (by Loblaw spokesperson Catherine Thomas) that “each year, by using these reusable crates, we keep millions of wax-corrugate boxes out of landfill.”Corrugated Recycles

FACT: Not true. “Millions” is a gross exaggeration for a start. Waxed boxes represent maybe 3% of all corrugated boxes produced and maybe 10% of boxes used for delivering fresh produce today. The waxes provide a moisture barrier so that ice, for example, can be added to the box to keep produce such as broccoli, fresh in transit. The paper industry has spurred development of alternatives to wax treatments and, in fact, sales of wax alternatives now surpass those of traditional waxes. Wax alternatives are perfectly re-pulpable and recyclable in packaging recycling mills throughout North America.

Loblaw and other grocers should check to see what’s actually happening at the back of their stores. Many grocers today are being asked to separate the waxed boxes from the normal (non-waxed) corrugated boxes they receive. The waxed boxes are then baled and shipped to companies that make fire logs or extract the paraffin from them. Stores that take advantage of this opportunity obviously don’t send any waxed boxes to landfill.

The history of paper packaging in Canada

Interesting to look back sometimes. Here is my contribution to a recent book on 100 years of papermaking in Canada.

Lightweight, Recycled, Sustainable: the Story of Canada’s Packaging Grades

The last 100 years of packaging in Canada have seen the replacement of heavy wooden crates with lighter corrugated boxes, and the rise of plastic and composite packaging, mainly at the expense of glass. While not immune to attacks from both inside and outside the industry, the paper packaging sector has chugged along, with the recent growth in e-commerce giving the corrugated box a timely boost.

The period has witnessed major shifts in product delivery: the decline in movement of goods by rail in favour of more “just-in-time” shipping by road; and changing demographic and consumption patterns: more people in towns and cities, an ageing population with different packaging requirements, more and smaller households (independent servings), and the rapid growth of the fast-food industry and convenience.. Read the rest of my article hereHistory: PAPTAC 100 Years of Knowledge

To purchase your own copy of this book: PAPTAC- 100 Years of Knowledge Connections

Something really fishy about plastic crate study

The battle between the corrugated box and the plastic crate industries for share of the fresh produce market is getting stranger by the minute. The latest twist is the release by leading crate supplier, IFCO, of a comparative life cycle analysis (LCA) that, guess what, favours the crate.

At first IFCO released only the executive summary of the study, garnering the “corrugated is worse” headlines that it sought in the trade press, and effectively delaying public scrutiny of any backup for its claims. LCAs and especially comparative ones, are supposed to be transparent so that everyone can assess the veracity or otherwise of the claims and assumptions made. PPEC requested a copy of the full report and finally received one. In the meantime, of course, IFCO has been touting the results of its study to growers and retailers alike, encouraging them to accept its conclusions as gospel.

Now hang on a minute! We had questions before, but the full study raises even more! In particular, we were looking for substantiation of the claim that more recycling of corrugated leads only to more global warming potential (GWP); and for back-up for the claim that the average recycled content of a US produce box is only 15 percent.

The full report is disappointing on both counts. There is no credible substantiation for the 15% claim, for example, only a deliberately vague reference to discussions with unnamed “industry Plastic Crate studyconsultants and fiber produce container manufacturers” (page 134). With some assistance, because the footnote reference in the study no longer works, we managed to track down one corrugated manufacturer who acknowledged that in 2012 he used 85% virgin board (from Australia) to make some produce boxes for a very specific application involving wet conditions.

That’s it! One guy, and some unnamed consultants! This is the flimsy evidence for surmising that the whole industry works this way. It gets worse. From Appendix F it seems that the Peer Review Panel didn’t even question the validity of the 15% assumption, which is really odd given how the results of the study depend so much on it being correct.

We can understand why the US corrugated box industry is upset. Their average recycled content has been publicly stated and verified to be close to 50 percent. In Canada, ours is even higher, at 80 percent. IFCO and its consultants really need to produce a lot more backup for their 15% claim if they want to be taken seriously.

Plastics industry quietly removes false bag claims

The Canadian plastics industry has quietly deleted a couple of the false claims it was making on its bags website. PPEC highlighted the claims in a blog last month.

Gone is the claim that the ULS Report was completed according to ISO 14040-14043 standards and peer reviewed by North Carolina State University. Not true. Also absent now is the false claim that paper bags have to be made from virgin pulp. In fact, they can be made from virgin or recycled pulp, or a blend of the two.

And instead of saying that “post-consumer recycled paper cannot be used to carry heavy items” (a ludicrous claim considering that much of the paper packaging made in Canada incorporates post-consumer recyPlasticsMay04cled paper, and performs well), the site now says that post-consumer recycled paper used to carry heavy items is “problematic.” About as “problematic,” we would assume, as carrying heavy items with post-consumer plastic. But then who are we to quibble?

All the plastic folks have to do now is remove those irrelevant summaries of old European “life cycle” studies that they love to quote on bags. Yes, the ones that have absolutely no Canadian data on how bags are actually made in this country. Canadians are not stupid, eh.

The reports of paper’s death are greatly exaggerated

We frequently hear and see comments about paper “dying” or being supplanted by other materials. It’s not happening, or at least not happening in the way many people think.

While the weight of paper entering Ontario homes, for example, fell by 8% between 2003 and 2014,(( PPEC analysis of Stewardship Ontario Blue Box data for 2003 and 2014. PPEC analyses on the generation, recycling, net costs, and EPR fees for all materials across Canada are available to members upon request.))  at least part of the reason is the continuous light-weighting of paper products that’s gone on over the years: newspapers and magazines with narrower pages, fewer flaps and layers of packaging, and a tighter fit between packaging and product. The introduction of lighter, high-performance board or micro-flutes has also displaced what some boxboard or paperboard used to do. Who could have predicted, for example, that a fast-food hamburger would one day be delivered in a lightweight corrugated box! Check out that distinctive corrugated ripple in the packaging next time you visit one of the chains.

Measuring generation by weight, of course, doesn’t give a complete picture of what’s going on in the marketplace, where volume and sales units rule. But it can be a useful indicator of changing market forces. Printed paper (especially newspapers), for example, has taken a severe hit from its electronic competitors. The weight of newspapers ending up in Ontario homes fell by 21% over the period, magazines and catalogs by 25%, telephone directories by a whopping 47% and “Other Printed Paper” by seven percent. This is the demise part of the paper story we mostly hear about.
Packaging exceeds newsprint in Ontario for the first time
But at the same time as printed paper generation declined by 20%, the use of paper packaging increased by 16%, basically offsetting any major changes to paper’s overall share. In fact, for the first time in Ontario, more paper packaging (corrugated and boxboard) ended up in the home than newsprint. So paper products, whether printed or packaging, still represent two-thirds of the dry recyclables in Ontario households by weight.

The two main household packaging types (boxboard/paperboard and corrugated) are up 27% and 9% respectively, with the small market gable top and aseptic containers also making significant gains (up 24% and 118 percent).

When you put these two changes together (newsprint down and paper packaging up), we pretty much have the status quo, although the trend line within the paper group seems to be clear. And as e-commerce distribution ramps up in Canada, more and more paper packaging (mostly corrugated) is expected to end up in the home. The good news is that most of it is 100% recycled content already, with almost all of it (98%) being collected for further recycling.

 

Old European “life cycle’’ studies are of little use in Canadian bag wars

When the plastics industry promotes and widely circulates false and misleading claims about the environmental impact of paper bags in Canada we have an obligation to defend ourselves, and to Old Studiesensure that Canadians get all the facts, not just some of them.

What we find particularly offensive is the public parade of various European “life cycle” studies in support of the claim that paper bags are bad or worse for the environment than plastic ones. None of these studies, in fact, reflect the realities of Canadian paper bag production. They are old, of varying quality and relevance, and not one of them includes Canadian data on how bags are actually made in this country.

  1. The data is old

Accurate data is critical to life cycle conclusions. The respected not-for-profit Institute for Environmental Research and Education (IERE) says that all primary data (data gathered directly from actual bag-making operations, for example) “shall be no more than three years old.” Secondary data (gathered from publications in the peer reviewed literature or grey literature such as government publications) “must be no more than 10 years old, unless it can be verified by an industry expert to be unchanged.”

When we look at the European studies that the Canadian plastics industry loves to quote, however, and which it splashes all over its bag-specific website, we see that every single one of them includes data that is over 10 years old.  The UK Environment Agency Report  (Data requirements and data quality 3.5, and Annex C Description of Inventory Data)  was published in 2011 for the data year 2006 but in fact uses life cycle inventory data that stretches back to 1999 (17 years); and the Scottish Report adjusts data from an earlier French study (Carrefour) whose data was “taken largely from the mid to late 1990s.

That’s over 20 years ago! Around the time of the Million Man March in Washington DC or the murder trial of OJ Simpson; Jack Nicklaus winning the British Open or former US Vice President Al Gore helping push the internet from academia into schools for the first time!

  1. The studies vary in quality and relevance

If you are going to quote life cycle assessments (LCAs) then at least quote the ones that are current (not old, as noted above) and ones that meet internationally acceptable standards for comparative analysis (ISO 14020, ISO 14021, ISO 14025, ISO 14040, ISO 14044, and ISO 14050).

Only two of the European studies cited were original LCAs. And both have problem areas which the authors and/or other life cycle practitioners have acknowledged. The Carrefour study was specific to France and how that country made and imported bags using data back in the 1990s; its relative treatment of greenhouse gas emissions at end-of-life has been questioned; and it used a different functional (measuring) unit than the other, later studies.

The UK study acknowledged that most plastic carrier bags were imported from Asia, but because no Chinese data-sets were identified, it modified average numbers supplied by the European plastics industry instead. Its Final Review statement also agreed that no clear comparison had been established based on the functional unit (thus not meeting a key ISO requirement).

And the Scottish Report, which the plastics industry says has “some of the most credible data,” was neither an original LCA nor peer reviewed, and acknowledged that its findings “cannot be used for a precise quantification of environmental impacts. This would require a full life cycle analysis based on the Scottish situation, which is outside the scope of this study.”

And here’s the clincher!

  1. There is no Canadian data in these studies!

We learn something about French, Spanish, Italian, Turkish, Malaysian and Chinese bags but nothing about Canadian bags from these studies. We learn about France’s energy grid (highly nuclear) and China’s energy grid (78% coal-burning at the time of one of the studies), but nothing about Canada’s energy grid (which is quite different). And this is crucial, because energy consumption is the major environmental impact category for every type of bag.

Life cycle experts like IERE say that “wherever possible, the electric grid data should represent the electricity purchased or generated by the local entity.” If that data is not available then you move to aggregated regional or national data.

So until Canadian energy data is used, as just one example, these studies have little relevance to Canada. The Canadian plastics industry tacitly acknowledges this when it rushes to point out that most Canadian plastic bags are not made from dirty coal or crude oil from China but rather from fossil fuel extraction in Alberta. But for some reason it doesn’t extend the same Canadian-specific rights to the Canadian paper bag industry for its high use of leftover sawmill residues and renewable, carbon-neutral biomass.

It’s not as if we haven’t told them this before,  numerous times. We have. Maybe, just maybe, incorporating this science and these facts into their public messaging to Canadians would seriously impact their preferred story line of paper bags being worse than plastic.

Hopefully, for its own credibility if nothing else, the plastics industry will do the honourable thing and delete these old and irrelevant-to-Canada studies from its website. And while it’s at it, maybe, just maybe, it will cover off one key factor that these studies and its bags website don’t address, the impact of bag litter on marine life, a growing environmental concern.

The end-markets get no love!

We were struck by a sentence in the recently released draft Strategy for a Waste Free Ontario. Not by what was said, but rather by what was not said.

In a chapter titled Transforming Ontario into a Leader, the Ministry of Environment and Climate Change pays tribute to the Blue Box: “an internationally recognised recycling program (that’s) available in 97% of households and (that) keeps approximately 66% of residential printed paper and packaging from landfills.” All good and true. Then it gives the credit: “Residents, municipalities, businesses, and waste management companies are responsible for its ongoing success.”

What! No mention of end-markets? Where does the ministry think all this material goes to? Where’s the credit for companies like Atlantic and Abitibi/Resolute that pioneered the recycling of old newspapers in this province? Where’s the credit for Cascades/Norampac, Strathcona Paper and others, that pioneered packaging recycling in Ontario back in the 1990s, including being the first mills in the whole of North America to use and develop a market for old boxboard?

Every siVarious Balesngle packaging mill in Ontario now uses old corrugated boxes from industrial and/or residential sources to make new packaging, most of it 100% recycled content. All provide jobs to Ontarions. All pay municipal taxes. As for the Blue Box, paper materials represent 75% of what’s collected and 50% of total Blue Box revenues. And that’s just the paper end-markets. There have been end-market innovations with other materials as well.

We are not saying that municipalities and their residents, businesses (especially those that supported the early work of OMMRI, CSR and now Stewardship Ontario), or the waste haulers, have not played an important role in the Blue Box success story. They have. We just want some of the credit too! There is no great Circular Economy without us. Our importance needs to be recognised.  Give us some love!