The global escalation of COVID-19 is causing supplier and customer disruption for e-scrap processors, while on a wider scale it constrains global shipping, dents stock prices and threatens an economic recession.
The coronavirus, which last week was deemed a pandemic by the World Health Organization (WHO), has grown steadily in scale since the first outbreak in China late last year. It is now in 166 countries, areas and territories. As of Thursday, March 19, there have been nearly 208,000 confirmed novel coronavirus disease (COVID-19) cases globally and more than 8,600 deaths, according to WHO.
The U.S. government last week declared a national emergency, and the impacts are filtering down into daily life across the nation.
Companies confront numerous challenges
E-scrap processors report coronavirus-driven disruptions both with vendors and customers, and they’re also doubling down on safety procedures within their operations.
Miles Harter, CEO of Onalaska, Wis.-headquartered Dynamic Lifecycle innovations, said his company has been “planning and communicating as a team basically full-time for the last week on all the scenarios unfolding to protect our people, customers and business.”
“We have had customers close sites, cancel events and cancel pick-ups in the short term until things improve,” he said, adding that there have been impacts on the vendor side, as well.
Harter anticipates these effects will continue until the worst of the pandemic has passed.
Universal Recycling Technologies (URT) has rolled out new workplace procedures to limit contact between employees, provide additional personal protective equipment and implement other measures to protect workers.
Additionally, Jeff Gloyd, vice president of marketing for the Janesville, Wis.-headquartered company, said URT has stopped accepting residential drop-offs at their facilities for the short term.
As far as downstream movement, Gloyd noted “it’s a struggle.” Commodity prices have fallen sharply across the board, he explained, and export logistics are proving difficult to navigate. Asia remains a major downstream market for U.S. e-plastics, but shipping to the region has been difficult since China’s manufacturing industry ground to a halt during the country’s coronavirus outbreak.
Domestic freight challenges are adding to the strife. Trucking rates have skyrocketed, Gloyd reported, potentially driven by the surge in trucking demand by big-box retailers desperately looking to stay stocked. Gloyd cited some reports that such retailers have used all their internal trucking capacity and are now consuming the third-party fleet market, as well. This, he said, is “kind of an unforeseen struggle for companies like ours.”
Additionally, although volumes haven’t significantly changed yet, the company is planning for a potential drop in collection.
“We anticipate from a business industry standpoint that we will see a reduced volume primarily from our consumer-type collectors,” Gloyd said.
Federal officials are recommending gatherings be limited to 10 people or less across the country, leading to some changes in community electronics recycling programs. The town of St. John, Ind. suspended its electronics recycling program indefinitely, as did Manitowoc County, Wis., Wheatfield, N.Y. and others.
Blue Star Recyclers of Denver closed its warehouse to the public beginning March 18. “We will still be working with business clients as needed, but we felt that having the doors open to walk-in traffic was too risky,” the organization wrote.
North Carolina processor Powerhouse Recycling has adopted new employee policies, including allowing greater schedule flexibility without penalty to allow for COVID-19-related hardships. The company has also staggered break times, considered shift changes, and added additional areas for employees to clock in and out instead of using a single time clock area, company Vice President Brett Henderson said.
The company has also increased cleaning procedures to disinfect the workplace throughout the day.
As for customer or supplier changes, Powerhouse has had a few of its local and state agency clients cancel planned pick-ups due to staffing changes driven by COVID-19. But overall, the company has seen minimal cancellations “and we have been able to keep our trucks rolling by offering quicker pick-up dates for already scheduled clients,” Henderson said.
Additionally, the company has had “a handful of school districts inquire if we can service their summer IT refreshes now, due to students being out of session for the foreseeable future,” Henderson said.
PCs for People, a nonprofit recycling operation with locations in Colorado, Minnesota and Ohio, issued a call for corporate computer donations to meet “drastically increased” demand for used technology. The organization said it is struggling to keep up with the demand it’s seen in recent days.
“Our services at PCs for People are needed more than ever right now in order to make education equitable for all children, access to telehealth, and access to information during extreme isolation for seniors,” the nonprofit group said in a release. “PCs for People is uniquely positioned as an organization to help low-income individuals obtain affordable technology.”
Overseas impact offers perspective
In Italy, where far more restrictive measures have been implemented than in most of the U.S., a data destruction company has seen major disruptions to its business operations. The company, Omtra Srl, described its “surrealistic” experience to data destruction industry group i-SIGMA, framing it as “a vision of the measures to be taken by i-SIGMA members all over the world.”
Giovanna Spadoni of Omtra wrote that her company has stopped all on-site data destruction services, including hard drive shredding, because the industries it serves – enterprise generators such as banks, insurance companies, law firms and other large corporations – are all shut down or working remotely. Data destruction at Omtra’s warehouse continued at a slower pace for about a month before shutting down altogether.
The company likened the situation to the Christmas holiday or summer vacation period.
None of Omtra’s employees has been infected with COVID-19, Spadoni wrote, but she described companies “that are totally closed due to the many COVID-19 cases among their staff.”
Industry events
The sweeping impacts of the coronavirus have been particularly visible in the conference and event world. The following are some of the event changes affecting the municipal recycling, plastics recycling and electronics recycling industries:
Canceled (some may eventually reschedule):
- March 15-17: Paper2020
- March 15-18: Southeast Recycling Conference and Trade Show (SERC) 2020
- March 18-19: National Zero Waste Conference
- March 22-25: International Conference on Solid Waste Technology and Management
- March 24-26: Plastics Industry Association Board Meeting and Fly-In
- March 31-April 2: SPC Impact 2020
- April 27-30: ISRI2020
- May 14-16: 2020 NAID and PRISM International Conference & Expo
Postponed
- March 14-17: Secondary Materials and Recycled Textiles Association 2020 Annual Convention postponed to unannounced date
- March 19-21: Kansas Association of Recyclers WORKS Conference postponed to unannounced date
- March 23-26: Carolina Recycling Association Annual Conference & Trade Show rescheduled to Aug. 3-7
- March 23-26: SWANApalooza postponed to unannounced date
- March 25-26: Plastics Recycling Show Europe rescheduled to Oct. 27-28
- April 2: MASSRecycle 2020 Recycling Conference & Trade Show postponed to unannounced date
- April 20-21: Northeast Recycling Council (NERC) Spring 2020 Conference rescheduled to Oct. 20-21
- May 4-7: WasteExpo 2020 rescheduled to Aug. 10-13
- May 18-20: Bureau of International Recycling World Recycling Convention rescheduled to Oct. 12-14
- May 18-20: Circularity 20 rescheduled to Aug. 25-27
As for the transition into the new normal, Omtra benefited from early preparedness.
“We have anticipated the governmental laws two weeks in advance, and this allowed us to make a light transition to working remotely,” Spadoni wrote. Still, she added, the company could have benefited by having more sanitary masks and disposable gloves before the outbreak began.
Impacts to shipping
Finding shipping containers to go overseas has been a major challenge in recent months, according to Gloyd of URT.
“Shipping containers might be available but they can’t leave the ports in China, Malaysia, Hong Kong,” he said.
During the first quarter of this year, shipping lines reduced the numbers of sailings across the Pacific Ocean. According to The Wall Street Journal, containership operators as of early March had cancelled over 110 sailings bound for North American ports; normally, there are about 200 containership sailings across the Pacific a month.
The reduction came as Chinese factories produced fewer goods and the Chinese logistics industry has struggled to move products to and from ports. Because of the production slowdown, fewer ships are needed to bring goods to North America. As a result, fewer ships and containers have been arriving on U.S. shores, meaning fewer were available to make the return trip to Asia.
The Wall Street Journal reported U.S. railroads and truckers serving ports are also being affected, with drivers struggling to pick up and drop off containers because of reduced gate capacity at ports. The Los Angeles Times wrote about the disruptions hurting truckers and dockworkers at the ports of Los Angeles and Long Beach, the busiest ports in the Western Hemisphere.
The China Scrap Plastics Association (CSPA) reports that factories are slowly resuming production, but they’re not near a desirable level. Logistics within China is heavily impacted, according to Steve Wong, executive director of the CSPA, with freight employees concerned about returning to work for fear of infections. This, Wong stated, is impacting the supply chain.
The coronavirus pandemic has massively disrupted ocean freight.
“Due to the coronavirus and less vessels operating, we have seen huge increases in ocean freight rates by double or even triple times the previous rate within the last two months,” Wong stated. As an example, he noted the freight rate for shipping from the U.K. to Hong Kong nearly tripled in the last three months, skyrocketing from $700 to $2,000 per container.
And despite the “unbelievably high rates,” Wong reported some shipping lines are fully booked through the end of this month.
Wong wrote that for the Asian plastics recycling industry, which remains the largest market for U.S. scrap plastics, the shipping situation has caused “an upset to the normal moving of plastic scraps to user countries in Southeast Asia and a short-supply situation is seen.”
A shipping company reported that freight strife within China may be starting to ease.
“Manufacturing activities are gradually picking up, more port workers and truck drivers are returning to their posts, and cargo flow is easing up at the major coastal ports,” shipping giant CMA CGM wrote in early March. “In short, business operations have now entered the recovery phase.”
Hitting stock values and the economy
Pandemic concerns sent global financial markets into wild fluctuation and spawned fears of an economic downturn. Financial institutions Goldman Sachs and JPMorgan in recent days predicted a recession will hit the U.S. economy this year as a result of the coronavirus.
Sims Metal Management, which owns global electronics recycling and ITAD company Sims Lifecycle Services, dropped to its lowest stock price in at least a decade and a half.
And waste management companies have seen significant stock value declines during the past week. Waste Management, Republic Services and Waste Connections essentially lost all stock-value gains they’d seen since early 2019.
Still, credit rating firm Moody’s on March 17 published a report showing the waste management sector as “largely resilient to coronavirus-related issues” under models employed by Moody’s. Global shipping, however, was classified as having “high exposure” to coronavirus fallout.
In part to stave off mandated closures of recycling facilities, the Institute of Scrap Recycling Industries (ISRI) wrote to the Trump administration, urging officials to designate recycling companies in all sectors as “essential” businesses.
Experts disagree about how long it will take for the U.S. economy to rebound from the turbulence. But a disruption in the U.S. economy, whether short-term or long-term, would certainly affect the scrap sector.
Adina Renee Adler of ISRI noted that scrap companies are the “first step in a supply chain,” so any time the manufacturing industries talk about supply chain disruptions, that includes scrap processors.
“Manufacturers curtailing production means they’re demanding less material, and we could have a supply glut again,” Adler said.
Associate Editor Jared Paben contributed to this report.
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