West Michigan manufacturers could be sitting on a widely available yet untapped revenue stream: old corrugated cardboard.
Fluctuations in the international market have nearly doubled the price for the ubiquitous material in recent months. While many manufacturers already recycle their corrugated waste, sustainability advocates believe the sharp increase in prices could sweeten the value proposition for companies that still send it to the landfill.
Overall, recycling the corrugated cardboard currently headed to landfills could represent a $115 million opportunity if residential cardboard waste is also taken into account, according to results of a study by the West Michigan Sustainable Business Forum updated with current pricing data.
“If they’re recycling, and every manufacturer should be, depending on how their rebates are structured, they could be expecting more scrap value,” said WMSBF Director Dan Schoonmaker. “If they’re not currently capturing it and they have enough where they can get scrap value for it, now is the best time to do it in 20 years. … (Recycling corrugated) hadn’t been deemed as much of an imperative, but now that the market is hot, the economic incentive has caught up with the moral one.”
Prices for old corrugated cardboard (OCC) have hovered near $170 per ton in recent months, roughly double the price it demanded a year ago, according to data provided by the Kent County Department of Public Works.
Aggressive demand from the Chinese market starting in November 2016 drove up OCC prices, according to a report in Recycling Today, an industry trade publication. The report notes Chinese demand for OCC may temper somewhat, although the commodity is still trading just below its peak price of $175 per ton in March.
For Schoonmaker, corrugated cardboard represents one of the easiest materials for businesses to recycle, both from an economical and operational standpoint.
“There’s a substantial number of companies that aren’t doing as good of a job as they could be recycling one of the easiest materials to recycle,” he said. “We flagged that in our landfill study last year as the definition of low-hanging fruit for improving recycling in Michigan. It’s the easiest thing to recycle and at the time a reasonably valuable material. The market is consistent, it doesn’t fluctuate. The majority of it — even in this age of Amazon Prime — is still coming out of the commercial sector.”
The West Michigan Sustainable Business Forum conducted a study last year showing that residents and businesses in the region sent roughly $399 million in recyclable material to the landfill. Of that, approximately $57.5 million was in the form of corrugated cardboard.
“If we’re talking about recycling for the sake of recycling for a community benefit, that value has increased dramatically over the last year,” Schoonmaker said. “Before we were talking about how it was a great big deal that we were losing so much material to the landfill when it was only about $57 million worth of material. Now it’s twice that.”
In addition to enticing new manufacturers to begin recycling, the increase in cardboard prices has also helped large manufacturers with their existing recycling programs.
For Ada-based Amway Corp., the increase in OCC prices helped support the company’s recycling efforts for other materials.
“What better prices do impact are the other items we recycle that are much less cost effective,” according to a statement from Amway executive Rick Van Dellen provided to MiBiz. “An example is plastic. The market for mixed plastic and film is not good. This is based on the price of crude oil and the China market drying up. So the increase in money we get for cardboard helps offset other costs we incur in our recycling program.
“Our approach is to track recycling by plant, and then pass the money we make on recycling back to each plant, based on the recycling revenue generated by the plant. Since all our plants recycle cardboard, they all will see that increase in the money they get back from the program. It helps motivate plants to continue to promote a comprehensive recycling program that includes materials that barely offset landfill costs.”
THINKING DIFFERENTLY
Kent County Department of Public Works director Darwin Baas sees the sheer volume of corrugated cardboard entering the region’s landfills and waste-to-energy facility as evidence that more needs to be done to encourage recycling.
Specifically, Baas has noticed an influx of more corrugated from the residential side as more people rely on Amazon and other online retailers to purchase goods. However, many small businesses still fail to see a return on recycling and have yet to implement programs to recycle their OCC.
To fix that, Baas believes smaller organizations need to band together to make recycling OCC cost effective.
“We have to think differently about what we’re throwing away and where it’s going,” Baas said. “Some of the small companies don’t have enough (volume) by themselves, but if you could get a couple of businesses to work together and begin to strip out OCC, there’s value in it. If you can get enough of that material and get it cleanly, the waste haulers will not charge you and they might pay you a little bit, so you end up shipping your trash container less often and your recycle container more often. It should net out the same or be part of a savings.”
While manufacturers generate their fair share of refuse, distributors, retailers and residential consumers generate the majority of OCC waste, Baas said.
For its part, the Kent County Department of Public Works plans to invest approximately $600,000 in a cardboard recycling line that will better allow the organization to sort and process the voluminous amounts of cardboard it still receives, Baas said.
“There’s not much more corrugated out there but retailers are seeing less of it and residents are seeing more of it and we need to have the right equipment in place for us to sort it efficiently,” Baas said.
