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 .

 

The good, the bad, and the ugly about Ontario’s Blue Box

The good news is that the reported recovery rates for almost every single material category in Ontario’s Blue Box have improved over the last 13 years, some by as much as 20 The Uglier Truthpercentage points. The bad news is that several categories have made very little progress and lag way behind the others, and that the real recovery rates are much lower than those reported.

Here is our Report Card by material group, based on the latest recovery numbers from Stewardship Ontario. Please note that this is not a judgement on the merits of individual materials but rather an assessment of how well they are being recovered in Ontario’s Blue Box system. There is clearly room for improvement.


PRINTED PAPER                                                            A 

Printed paper has been a consistent good performer, rising from 67% reported recovery back in 2003 to 82% today (2015). The recovery rate for old newspapers and old telephone books is in the 90s. Somewhat further back, and dragging the printed paper category down, is the recovery rate for printing and writing paper (Other Printed). This has ranged from 39% up to 59% and is currently at 55 per cent.

 GLASS PACKAGING                                                    B+

The reported recovery rate for clear and coloured glass is an impressive 80 per cent. Years ago, all we heard about was glass going to landfill or being used as road fill. Beyond talk of glass breaking in the collection process and contaminating loads of other materials, however, glass recovery is apparently in good shape. A lot of recovered glass these days goes into blast and filter media rather than higher end uses such as fibreglass and cullet which have more demanding quality requirements.

PAPER PACKAGING                                                       B 

Old corrugated containers (OCC) or boxes have the highest reported recovery rate of all Blue Box materials (98%). From there it’s a drop back to paper-based gable top cartons which have surged from a 10% to a 61% recovery rate; boxboard at 43%; followed by aseptic cartons (made of paper, plastic and aluminum), and laminants. The relatively low recovery rate for old boxboard is a concern. It reached as high as 65% recovery in 2008 but has dropped back to 43% since. Stewardship Ontario did target boxboard toothpaste cartons, toilet paper roll tubes, tissue boxes and other toiletry packaging in an advertising campaign in 2015.

 STEEL PACKAGING                                                      B 

The latest reported recovery rate for steel food and beverage cans is a respectable 71 per cent. Other steel packaging such as aerosols and paint cans drag the overall steel category down 10 per cent. In fact, paint cans are the only category in the Blue Box whose recovery rate has declined over the last 13 years.

ALUMINUM PACKAGING                                          D 

The low reported recovery rate for aluminum food and beverage cans in Ontario (42%) has always been a bit of a puzzler and is frequently compared unfavourably with its far higher recovery rates in Canada’s many deposit provinces where recovery ranges between 61% and 97 per cent. One reason offered for the difference is that the recovery rate for cans in Ontario is only for those that end up in the home. It doesn’t include those used at public events, in offices, or factories. The aluminum stewards also reported residential sales some 13% lower in 2015 than what various waste audits used to provide a provincial total suggested was in the home. But even if you allow for this difference, the reported recovery rate only rises to 48 per cent. We doubt that Blue Box scavengers are grabbing the other 52 per cent.

 PLASTICS PACKAGING                                                D 

The reported recovery rate for plastics packaging reached 32% in 2015. The highest rate was for PET bottles (66%) and the biggest increase over the years was turned in by the “Other Plastics” category with one-third now being reported as recovered. Apart from PET and HDPE bottles, however, the plastic recovery rates are poor.


The far uglier truth about all reported Ontario Blue Box recovery rates, however, is that they don’t tell the real story. They are basically “sent for recycling numbers,” in most cases, what was sent to an end-market from a material recycling facility or MRF. These reported “recovery” rates don’t deduct the various yield losses that occur in remanufacturing that curbside material back into new products, or the contamination that must be removed (and is normally landfilled) before remanufacturing can actually take place.

For example, all reported paper numbers need to be shaved by at least 10% because paper fibres shrink in the re-pulping process. When a municipality sends 100 tonnes of paper to a paper recycling mill, only 90% of it will come out the other end. And with single-stream collection there is a lot more plastic, glass and metal contamination in the paper bales. This is usually sent to landfill. And you can chop maybe 30% off the reported PET bottle “recovery” rate since PET yields at the end-market range, at best, between 60 and 70 per cent.

A recent attempt by the Canadian Standards Association to grapple  with this issue and come up with a definition of recycling, falls short in our view, and is one of the reasons why PPEC is developing a more accurate and real measurement of what paper materials are actually being recycled in this province.

 

P.S. In our last blog on the Blue Box, we claimed that “over 75%” of what the Ontario Blue Box collected in 2015 was paper of one kind or another.  The “alternative fact” is 74.55%. Close but not correct. Sorry!

 

Reported Recovery Rates

 

Source: PPEC  Analysis of Stewardship Ontario Blue Box data between 2003 and 2015

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!

Retailer hands container choice back to growers

A major produce retailer in Canada has decided that the growers who supply it with fresh fruit and vegetables should choose which container to deliver their produce in, the traditional corrugated box or a reusable plastic crate, rather than the retailer telling them which one to use.

This is a significant development in the crate versus box struggle for market share in this sector, even though the company says it’s only a trial. In recent years, some retailers have basically told their growers which container to use whether the growers liked it or not, a sore point with many growers who feel they have been left to carry the can on health and safety liability, and other issues. Now at least they have a choice.

The backdrop to this, of course, are the claims and counterclaims for economic and environmental superiority traded by the crate and box lobbies, and a heightened concern about the effectiveness of crate sanitisation. Stay tuned.

The more plastics you add to Ontario’s Blue Box, the more it costs

It’s easy to describe plastics as the problem child of the Ontario Blue Box. Just look at the chart below. Its generation continues to increase; its volume fills trucks and landfills; its net cost to recycle is more than three times that of paper packaging; almost 70% of it heads to the dump.

While the plastics industry is making some efforts to render its packaging more easily recyclable, it’s also promoting energy-from-waste (EFW) as a solution for certain packaging grades. EFW may well be a solution to a waste management problem, but it is only one part of a larger issue, that of material choice and design, whether design for the environment or design for recycling.

The Ontario Ministry of Environment and Climate Change (MOECC) in its recently released Strategy document has called it correctly.  It will not allow EFW to be defined as “waste diversion,” as the plastics industry would like. This is not mere quibbling over semantics. The MOECC is not opposed to EFW as a technology. But if EFW is defined as waste diversion then there is nothing to stop the plastics industry and plastic stewards from loudly proclaiming a 60, 70, 80 or 90% “diversion” rate for plastics which would put it on par with what most of the other packaging materials have already achieved through recycling (see graphic below). The plastics industry should not be given a free pass to keep pumping out more (mostly virgin) product without a reasonable effort to recycle more. Just over 30% doesn’t cut it.

One option might be to set two targets, one for recycling (i.e. diversion) and one for recovery (e.g. EFW), rather than to call them both diversion, because, as the MOECC argues, EFW is primarily a disposal option, about burning waste management residues.

There is another key element in this debate: the “message” that the Blue Box fees give to the users or stewards when they choose different packaging materials. The choice to use plastics should fairly reflect its total cost to manage throughout the Blue Box system. At the moment, the overall impact of the fee structure is to reward the materials with lower recycling rates, because the fees are so closely tied to net costs. Put another way, the more you recycle the higher the net costs. So the more plastics that are recycled, the higher the costs for the whole Blue Box.

This “message to stewards” issue will become even more important when Ontario stewards fund 100% of Blue Box costs, double what they pay now. It’s a bit of an understatement to say that the new fee structure currently being developed by the Canadian Stewardship Services Alliance (CSSA) will be one of the most closely scrutinised documents around. Everyone wants a more level playing field.

 

Recovery Rates Charts 2014 - Paper Packaging & Plastics

Retailers urged to “ follow the science ” on sanitisation

The corrugated box industry is just fear-mongering about food safety, according to the reusable crate lobby, which has obviously been stung by the release of yet another study questioning whether, and how well, crates are being cleaned between uses.

The latest study by Dr. Steven Ricke’s team at the Department of Food Science at the University of Arkansas demonstrates that typical industry cleaning procedures don’t actually sanitise the crates. Salmonella cells remained on the crates after cleaning. The authors suggest that bacterial biofilms hide in the cracks and crevices of the crate’s surface, making it harder for industrial sanitizers to reach them.Follow the Science - Dirty Crates

Dr. Ricke says industry claims that crates are “99.5%” clean after sanitisation sound impressive, but that the missing 0.5 % could hold a lot of cells that could cause a lot of trouble. All it needs is one cell to multiply, to spoil product, to transfer to the next batch of fresh produce, to make someone sick or cause premature spoilage.

Any promises to remove pathogens or micro-organisms from reusable packaging that’s carrying food, he says, are not based on data. “The only guarantee that’s valid from a scientific standpoint is (that) these cells cannot be removed using commercial methods or materials.” To eliminate that risk of contamination, Ricke recommends shippers use single-use rather than multi-use packaging.

The crate industry has fired back at Ricke’s latest work, saying that “laboratory experiments” and results are no indicator of real-world realities. Point taken. But that doesn’t mean a problem doesn’t exist. Dr. Keith Warriner’s real-world studies in Ontario and Quebec in 2013-2014 strongly suggested that crates being re-used in Canada were either bypassing the washing facility in Chicago entirely or not being washed properly when they got there. E. coli was found on 13% of the crates tested. And here’s another real-world experience. A PPEC-member company recently received an emergency call to supply corrugated boxes because the crates that had arrived were mouldy and unusable.

It’s way past time for all the interested parties to agree to an independent study to establish a credible baseline for sanitisation testing. Is the crate lobby willing to participate?

Getting the facts straight on packaging diversion in Canada

In the course of an otherwise interesting article on Individual Producer Responsibility (IPR), Tom Chervinsky makes a statistical boo-boo. See, I am mellowing. I didn’t call it package bashing.

Chervinsky is certainly not the first, and won’t be the last, to play footsie with the facts. He starts out well, observing that the percentage of waste that Ontario diverts from landfill has remained stagnant for the last 20 years. The most recent Statistics Canada survey (2012) pegged it at 24 per cent.Compare packaging rates

But then he asks us to compare Ontario’s low number with the claimed packaging recycling rates for Germany, the Netherlands, and the United Kingdom. Whoa already! You can’t compare the Ontario diversion rate for all wastes (paper, organics, white goods, electronics, construction, renovation, and demolition materials, plus tires and other stuff) with some countries’ claim for a single category such as packaging. You have to compare packaging rates with packaging rates.

And there, Ontario, and Canada, have a problem. Because we don’t know the current diversion or recycling rates for packaging in this country. The most comprehensive survey ever conducted specifically on packaging in Canada is now almost 20 years old. We can debate its validity today, and certainly there have been changes in packaging usage over the years (less glass and more plastics). In fact, this issue of packaging recycling rates in Canada is a well-travelled road. We have taken both Ontario and Canada’s Ministers of the Environment to task for similar misuse of available data in the past.

So what can we say about packaging recycling rates in Ontario or Canada? Our alternatives seem to be to quote the 1996 National Packaging Survey which estimated that over 70% of packaging was being re-used or recycled, and that industry (not households) was doing most of it (91%). Or we can apply those 1996 per capita rates to current populations while recognising the statistical cautions that arise in doing so.

But what we cannot do, as Mr. Chervinsky has done, is blindly assume that packaging‘s recycling rate is the same as that of all other materials in the waste stream (white goods, organics, tires). Besides, some data, and admittedly anecdotal evidence, suggests that Canada may, in fact, be doing as well as, if not better than, many of its European cousins on the packaging recycling front. But that’s a whole other blog.

Industry well on the way to solving the waxed box issue

Although relatively few corrugated boxes have wax applied to them (about 3% of all corrugated produced), they have long been a “problem” material when it comes to recycling. Those days may be numbered.

Wax coatings have traditionally been applied as a moisture barrier to preserve the strength of a box holding wet or iced products such as fresh fruit and vegetables, meat, poultry and seafood. The problem was that the waxes made the boxes difficult to recycle along with the other corrugated. The recycling mills couldn’t use them, and retailers didn’t like sending them to the dump. And because it was sometimes hard for the young kids employed at the back of stores to tell the difference between waxed and non-waxed boxes, a lot of “good” corrugated went to landfill as well.

PPEC was part of a North American industry alliance in the 1990s that came up with the idea of identifying the waxed boxes in some way so that they could be easily separated from Waxed Corrugated is Recyclablethe others. We suggested that the words for wax in English, French and Spanish be printed on the box flaps. Unfortunately, the idea never took off, mainly because some box manufacturers felt that identifying their boxes as waxed was a negative, that it made them a target. At the same time, the reusable plastic crate lobby was exploiting the image of waxed corrugated going to the dump as an entry point to gain market share against the traditional corrugated box system. On top of that, some coatings manufacturers were going around to mills and corrugated manufacturers claiming that they had developed new coatings that were recyclable.

To get a handle on the issue, the US-based Fibre Box Association, working through the Corrugated Packaging Alliance, developed a science-based protocol that coatings manufacturers would have to meet to be able to claim that their coatings were recyclable in mills throughout North America. Company products meeting the standard were certified and allowed to use the wax alternatives logo.

The use of wax alternatives has ramped up significantly over the last few years, and this month was reported, for the first time, to have overtaken sales of boxes using traditional coatings. Almost 50 different wax alternatives have now been certified as recyclable. This is great progress and an industry success story.

There is no diect connection between paper ending up in landfill

We don’t cut down trees just because paper is in the landfill

A slide shown at the Conference on Canadian Stewardship in Banff last week claimed a direct connection between paper ending up in landfill and the need to harvest fresh trees. There is none, as far as paper packaging in Canada is concerned.

There is no diect connection between paper ending up in landfill

While it’s true that the overall paper life cycle requires fresh (virgin) fibre to be introduced at some point in the system to keep the whole paper cycle going (we wrote a blog about this some time ago), it is not true that paper products ending up in landfill automatically require the harvesting of fresh trees to supply new feedstock. It is especially not true when applied to paper packaging made in Canada, for two main reasons.

First, most Canadian packaging mills are not built to run using virgin material. So when a containerboard mill, for example, runs short of locally available recycled fibre to make a new corrugated box, it does not seek virgin fibre to make up the difference. Because it is built to run on recycled fibre, it must seek recycled fibre from other sources. Usually this means eating into the millions of tonnes of used packaging already being collected in North America and exported to Asia for recycling there. There’s plenty of it to go around (about nine million tonnes exported from the US in the last year alone).

Second, most of the boxes that end up in Canadian landfills are not made from virgin material in the first place, so you are not replacing virgin boxes, you are replacing mostly recycled material. In fact, given the nature of the fibre cycle itself, that material may very well have been recycled up to nine times already, before becoming too thin and weak for further recycling. As noted in a previous blog, most packaging mills in Canada make a 100% recycled content product. We don’t want any of it to end up in the dump. This is our feedstock and we want to use it again and again, which is why we are lobbying provincial governments to ban it from disposal.

So next time you see this false chainsaw assumption because of what’s in landfill, please challenge it.