September/October 2019
By Emilie Shumway
With e-commerce on the rise, more corrugated cardboard is going straight to residences, where people are less likely to recycle it. Now, cardboard manufacturers and sustainability advocates are stepping up their efforts at recovery.
Whether they previously shopped at department stores, electronics stores, pharmacies, grocery stores, hardware stores, or warehouse stores, more and more consumers are taking the bulk of their shopping online every year. In 2000, e-commerce was less than 1% of all U.S. retail sales. This year, it’s more than 10%, and the U.S. Department of Commerce predicts it could hit 30% as soon as 2025.
Companies in the packaging life cycle have taken notice, from haulers to MRFs to manufacturers. The change in consumers’ shopping habits has implications for recyclers of old corrugated cardboard, as cardboard boxes remain both a favored medium for shipping and a key input in the manufacturing of new boxes. Manufacturers committed to using OCC as their source material are growing more reliant on residential recycling.
The use of both OCC and virgin fibers in corrugated cardboard manufacturing keeps the system balanced, say corrugated manufacturers. On average, “any box you might pick up [has] 50% recycled content in it,” says Rachel Kenyon, vice president of the Fibre Box Association (Itasca, Ill.). Kenyon points out that in 1970, a cardboard manufacturer, the now-defunct Container Corp. of America, sponsored a contest that resulted in the now-ubiquitous chasing arrows recycling symbol.
While the corrugated industry began thinking about OCC recovery in the ’70s, it introduced the corrugated recycling symbol and first started tracking its recovery rate in 1993, Kenyon says. It was 54% then; now it’s well over 90%, the Fibre Box Association reports. This high recovery rate is largely a result of partnerships between the industry and commercial and industrial sources of OCC. “We’ve been working for a very long time to make sure that the infrastructure’s in place” in traditional retail settings, Kenyon says. For workers at grocery stores and clothing outlets, breaking down boxes, stacking, and even baling them are a routine part of the job. As a result, corrugated manufacturers could rely on a steady flow of OCC. With more cardboard going straight to individual consumers, the outlook has grown murkier. To gain a better understanding of the trend, the Fibre Box Association partnered with consulting firm Resource Recycling Systems (Ann Arbor, Mich.) on a study of residential OCC recycling habits.
Unique Challenges
First, the good news: Individuals are especially likely to recognize corrugated as recyclable among the recoverable materials at the residential level, the research found. Why people are likelier to identify OCC as recyclable is less clear, though it’s likely a result of the product’s long, continuous existence and comparatively early efforts by the industry to emphasize recovery.
Unfortunately, that hasn’t always resulted in households recycling correctly. “The classic example is the pizza box,” says David Refkin, affiliate senior consultant at RRS, who worked on the study. Contamination from grease and other food is a common issue for cardboard. Though parts of pizza boxes can be recyclable—the lids, for example, are usually free of grease—households often receive mixed messages about whether and how to recycle them.
Also problematic is when cardboard is stored or placed outside, leaving it vulnerable to the elements. Unlike more resilient materials, like plastic and metal, a perfectly recyclable stack of cardboard can be reduced to a soggy mess after one rainstorm or blizzard, setting off a molding and decomposition process that leaves it too contaminated for processing. Unfortunately, because cardboard is likely to be among the bulkiest of an individual household’s recyclable materials, it is also most likely to be left exposed—leaning against or sticking out of the bin. Even on a dry and sunny day, a hauler might categorize cardboard outside the bin as waste, depending on MRF policy.
Overwhelmingly, and even more so with the growth in e-commerce, recyclers and advocates say the biggest source of cardboard contamination is not food or weather damage but the insulation material that accompanies shipped boxes: packing peanuts, air pillows, bubble wrap, and extruded polystyrene. It isn’t unusual for consumers to remove their products from the box and then drop that box in the bin without first removing those extraneous, protective bits. These materials can be a headache for the MRF when they get stuck in or wrap around machines.
Even clean OCC in the residential stream can fail to get to end markets. The rise in e-commerce has introduced more small and unusually shaped cardboard packaging, complicating some MRFs’ ability to separate and process it into the right categories. Bob Cappadona, vice president of Casella Recycling (Scarborough, Maine), says Casella has made some adjustments to its equipment to accommodate small boxes. At many MRFs, cardboard surfs over an OCC screen of rotating shafts covered in disks that are typically 10 or 12 inches apart. Because smaller OCC containers tend to fall through those gaps, Casella worked in-house to redesign the disks and move them closer together, allowing more small material to surf along the top. In some facilities with older screens, they’ve replaced the entire screen. Casella also uses optical sorting, in which a computer identifies cardboard and extracts it with air jets. “These are two adjustments we’ve had to make” from the growth in e-commerce, Cappadona says—what many call the “Amazon effect.”
Despite these challenges at the residential and MRF levels, those in the industry stress that OCC is a valuable commodity and one they want individuals to recycle. Some note that advances in technology are happening all the time, helping recyclers outpace the difficulties. “Machine manufacturers are coming up with better technology every day to separate OCC from other commodities in commingled programs,” says Shawn State, president of Pratt Recycling (Conyers, Ga.), noting that the technology is not only helping ensure more corrugated gets recycled—it’s also improving issues with contamination.
Boosting Residential OCC Recycling
Although individuals are likely to identify OCC as recyclable, RRS and the Fibre Box Association found that they’re still far less likely to actually recycle it than commercial and industrial sources are. Estimates of the residential recovery rate range from about 37% to 40%.
For many, the issue is access. Just over half of the U.S. population has automatic curbside recycling, Refkin says. Some municipalities make residents pay a recycling subscription fee, which can significantly reduce participation. “You’re only going to get those people who really want it,” Refkin says. “10% may be willing.” Some towns offer recycling without a separate fee, but residents don’t realize they need to opt in. RRS recommends more funding for educational programs that help connect people to their recycling options.
RRS found that despite the high opportunity they present to collect recycled materials, multifamily dwellings have historically had low recovery rates. Refkin and Kenyon say this is due to a few issues: higher levels of transience, resulting in less awareness of how recycling works at the location; higher likelihood for language barriers; and more hoops to jump through to get materials to the right spot. “It’s not as easy as putting [the bin] by the garage door and dragging it out to the sidewalk,” Refkin says.
In a Fibre Box Association survey of multifamily housing residents, 39% reported receiving insufficient recycling information, and close to a third reported a lack of room in either the residence or the property’s designated recycling area. Another 17% said the recycling location was inconvenient. Older apartment buildings often have a trash room but no accommodation or space for recycling, Kenyon says, leaving residents unsure how to handle their recyclables or too frustrated to deal with them. RRS suggests that building engineers, landlords, and other multifamily dwelling stakeholders take a leadership role in easing recycling access and education for residents. Multilanguage educational materials, standardized labels on bins, and more graphics would also help to overcome the language barrier some residents experience, it says.
Millennials, who are more likely to live in multifamily dwellings, require special attention, RRS says. Compared with other generations, millennials have taken much more of their shopping online, with 51% purchasing something online monthly, 30% buying something online weekly, and 8% shopping online every day. With a disproportionate amount of corrugated flowing to millennials, Refkin says they present a special opportunity for recovery, especially as they have “more of an intent to recycle.”
RRS and FBA also found that rural areas are both a challenge and an opportunity for OCC recycling. Because rural residents tend to recycle cleaner cardboard, and because a reduction in local retail has led more rural residents to shop online, their OCC is “low-hanging fruit,” the report says. In addition, those who live in the country are used to driving, so they don’t mind relying on drop-off facilities for their recycling—as long as they aren’t too far out of the way. “They should be placed conveniently,” Refkin says. “By a store that people frequent, or a road that people drive down.”
Certain challenges to OCC recycling apply across all demographics and types of households. Refkin describes the frustration many people experience at having to stagger their recycling after cardboard-heavy celebrations like Christmas and birthdays, bringing out only a few boxes every week. RRS and FBA recommend that municipalities make bigger bins available for recycling—even 96-gallon carts rather than 18-gallon bins, to match the standard size of many trash carts. They also suggest making recycling pickup as frequent as trash pickup. These two changes would reduce the incidence of individuals standing at the cart and making a decision about what goes in the recycling and what doesn’t. Given the bulkiness of OCC, cardboard manufacturers are more likely to lose out in that scenario.
Finally, there are customers who simply want to keep their boxes, further driving down the recovery rate. “People do recognize cardboard boxes as a useful product,” says Susan Cornish, associate at paper recycling consulting firm Moore & Associates (Atlanta). In a presentation she gave with Moore & Associates President Bill Moore at ISRI’s convention in April, Cornish shared findings from a survey she conducted among consumers. As many as four in five people keep at least some of their boxes, she says. “People store things, put them in the attic, use them for yard sales, take stuff to Goodwill, [or] use them as cat toys,” she says. “There are even people who make cardboard sculptures.”
Slow and Steady Build
The growth of e-commerce has not yet caused a shortage of OCC, State says. Like the markets for many other recycled commodities, the OCC market was severely altered by China’s decision to apply more stringent contamination rules to imported scrap. After the 0.5% contamination threshold took effect in 2018, OCC exports from the United States to China dropped 40%. OCC processors and brokers were forced to look for other markets both at home and abroad, creating a surplus of supply in those markets and driving down prices.
The reduced value of OCC in the wake of China’s new contamination policies, combined with the rising demand for new cartons caused by growing e-commerce, has sparked a renaissance for North American corrugated manufacturers. In March, the New York Times covered the purchase and reopening of a previously shuttered fiber mill in Combined Locks, Wis., by Midwest Paper Group. A number of others are also in the works. “We know there are at least half a dozen or a dozen [openings, conversions, or expansions] in the Northeast that are occurring right now,” Cappadona says. “Though it’ll take anywhere from 24 to 36 months” for them to become operational. (See “Gearing Up” in the July/August issue of Scrap for more details.)
While it may appear that demand for corrugated overall is increasing, Kenyon says this isn’t necessarily the case. People are more aware of the packaging, she says, because it shows up on their doorsteps. But with the decline in brick-and-mortar retail, this may be more of an indication of a shifting distribution channel than an increase in consumption. “If it’s coming to your house, it’s not going to a store,” Kenyon says. “So there’s that substitution taking place.”
Cornish has studied this substitution in depth, comparing the fall of brick-and-mortar retail with the rise in e-commerce. She found that e-commerce is growing at a rate of almost 15% a year in the United States, while overall retail growth is only about 4%. Retail employment, a good indicator of brick-and-mortar health, shrank dramatically in 2017, and department stores alone lost 100,000 jobs in 2018. In contrast, employment at fulfillment centers and warehouses—centers of the e-commerce supply chain—has grown significantly.
It is very difficult to gauge the number of boxes actually ending up in residences versus in commercial or industrial locations, Kenyon says. While the Fibre Box Association tracks boxes using the North American Industry Classification System codes, it focuses more on end use than the distribution channel. “The largest segment of use is food and beverage,” she says. “So a lot of nondurable goods go into [cardboard] packaging—and we haven’t necessarily seen a change in that.” Items like groceries, especially perishable or fragile products like milk, eggs, and produce, are still overwhelmingly purchased by customers at brick-and-mortar stores.
Though mills are opening or expanding in anticipation of more corrugated demand as a result of e-commerce, the actual rate of growth in domestic corrugated demand has been fairly stable over the past few years at 1% to 2.5% a year. Demand dropped in the years leading up to the 2008 recession as manufacturing moved offshore, but e-commerce has strengthened the industry in the years since. In 2017, U.S. box-makers produced 386 million square feet of corrugated, putting the industry back in sight of its peak year of 1999, when it produced 405 million square feet.
The Unpredictability of Innovation
With Amazon.com purchases nearly 50% of all online shopping, the changes that Amazon makes can shake up whole industries. Hence the term “Amazon effect,” which the business community uses to refer to the impact of rising e-commerce on all other industries. Though the impact is often considered negative—it’s blamed for the closing of brick-and-mortar bookstores and clothing shops, for example—sometimes, as in the case of corrugated boxes over the past few years, it can be positive.
But Amazon is also on the forefront of packaging innovation, meaning what was the case in 2019 may not be the case in 2020. A little over a decade ago, Amazon introduced “frustration-free” packaging, an initiative through which the company works with brands to ensure, among other things, their boxes are “right-sized” and contain as little packing material as possible. While a reduction in “over boxes” means Amazon is consuming less corrugated—it has avoided using 500 million boxes since the program’s introduction, it says—fewer air pillows, packing peanuts, and other inner materials also mean residential corrugated is more likely to be recycled without contaminants.
In 2018, Amazon began shifting to fewer corrugated boxes and more plastic mailers, Cornish says, which aren’t recyclable through the residential stream. Plastic is lighter to ship and takes up less space, allowing more products to be loaded on trucks and arguably reducing the company’s carbon footprint. “At this point it’s unclear how much the plastic mailer will cannibalize cardboard boxes for shipping,” Moore adds.
Further complicating the outlook for corrugated, Amazon introduced “Amazon Day” for its Prime members in 2019. Through the program, customers can elect to have all their purchases grouped and shipped together on a particular day of the week, cutting down on their packaging. Amazon says it intends this move, like several of its other packaging innovations, to help it achieve its goal of “Shipment Zero,” or 50% net zero carbon emissions by 2030.
More changes are on the horizon, though what will happen next and how it will affect the OCC stream are still uncertain. “In operations alone, we have over 200 scientists, engineers, and product designers dedicated exclusively to inventing new ways to leverage our scale for the good of customers and the planet,” Amazon posted on its blog earlier this year. The company continues to invest in drones as a possible future delivery option, and earlier this year, it offered its own employees a cash incentive to start their own delivery businesses.
Still, for now, investors are betting on a strong future for corrugated, and recyclers and manufacturers are taking steps to ensure more residents have the information they need to recycle properly. Cappadona says Casella Recycling uses social media to keep residents informed of common contaminants through their RecycleBetter campaign. In July, the company posted to Facebook photos of plastic bags tangled up in equipment and created a true-or-false poll asking Facebook followers whether bubble wrap, air pillows, and other items were acceptable in their household recycling. Following its study in partnership with the Fibre Box Association, RRS recently wrapped up a pilot program designed to increase recycling at three multifamily dwellings in Boston. Refkin says their efforts were highly successful in increasing recovery rates.
Despite the unpredictability of the future OCC market, Refkin commends the manufacturers of corrugated cartons that the Fibre Box Association represents for recognizing the importance of residential recycling recovery. “Markets are always changing,” he says. “The industry was smart enough to say, ‘Hey, this may not be a big problem today—but this is going to be. So let’s figure it out.’”
Emilie Shumway is editor/reporter for Scrap.