What Does the Supply Chain Crisis Mean for Recycled PET Plastic?

What Does the Supply Chain Crisis Mean for Recycled PET Plastic?

 

A traffic jam of historic proportions, an estimated half-million shipping containers are floating aimlessly off the coast of California. And unlike going bumper to bumper at rush hour, the frustration is affecting more than just the drivers.

As the twin ports of Los Angeles and Long Beach face the brunt of the supply chain crisis of the century, both manufacturers and consumers have felt the ripple effect. Yet, lost in the kerfuffle are recyclers, who may have the tallest order of all.

With our import/export market crippled, U.S. manufacturers’ insatiable demand for recycled PET plastic, known as rPET, will need to find an alternative route around the roadblocks.

Why is There A Global Supply Chain Backup?

Collectively, the Port of Los Angeles and the Port of Long Beach, separated by only three miles, handle approximately 40% of all imports that enter the United States. The shipping complex is an epicenter for trans-Pacific trade, accepting gargantuan container ships—some capable of carrying over 15,000 individual units—from around the world, hauling everything from ice skates to beach towels to sheet metal.

On a normal day—perhaps in pre-pandemic times—the acceptable queue for port operations would be to have “zero to one” ships at anchor waiting to dock. In October 2021, that number reached an all-time high of 87. 

But why is there such a shipping crisis? And why are there supply shortages at all? It turns out the factors are many, and they’re almost entirely a result of COVID-19 disruptions. 

In the early days of the pandemic, and even into 2021, city lockdowns, manufacturing shutdowns, and labor shortages disrupted the global supply chain—meaning the output of factories and movement of goods was drastically reduced or halted entirely. 

At the same time, consumers faced a new reality of living, working, eating, recreating, and shopping at home. Met with unprecedented demand from an increased online retail and high consumer spending power (facilitated by stimulus efforts), U.S. imports skyrocketed. As more overseas manufacturers came back online, all of those IOUs and backorders were first up to be fulfilled.

But despite a flood of material goods entering the United States and the Californian ports operating 24/7, the problem becomes more complicated still. As the delta variant of COVID-19 worsened, port employees, crane operators, and truck drivers proved as scarce as toilet paper was in 2020.

This has resulted in overstuffed warehouses, bare shelves, and, importantly, manufacturers faced with no other option but to shutter plants from lack of material for their products.

But while lumber and semiconductor computer chips grabbed all the headlines, it’s a recycled plastic known as rPET that has seen demand radically outstrip supply.

Why is the Market for rPET So Hot?

rPET stands for recycled polyethylene terephthalate. PET, identified with the #1 “chasing arrows” symbol, is most often used for beverage packaging like bottles water, soda, and juice. 

In 2021, the world is expected to produce over 550 billion bottles created from virgin PET. And somehow that still isn’t enough to overcome the current situation, and PET has been harder to come by. It’s why the Mountain West has expensive water, Wisconsin can’t stock milk, and small businesses are being cut out of the supply chain entirely.

However, it’s the surging demand for rPET which has been more greatly affected by the shipping crisis.

Already harder to come by, beverage giants from Unilever to rivals Coca-Cola and Pepsi have been fighting tooth and nail to get their hands on more rPET in order to meet promised goals for sustainability and recycled content usage. Simultaneously, clothing brands like H&M and Nike are hoping to boost their impact and lower their carbon footprint by using rPET as a synthetic polyester in their apparel and garments.

Conservative estimates predict that between beverage manufacturers and the apparel industry, demand for rPET will reach 3.4 billion pounds by 2030. With current domestic production of rPET below 10% of that number, Americans would need to recycle almost every single PET bottle sold in order to gain enough material. And unfortunately, we’re not at all close.

Domestic Opportunity for rPET Created by the Shipping Crisis

According to the EPA, Americans only recycled 29.1% of PET bottles and jars, while discarding 3.13 million tons of PET plastic overall (for reference, an empty water bottle weighs about 9.25 grams).

It’s a conundrum because the material citizens of the United States are so quick to trash is the same that could not only make us less prone to supply chain disruptions (by relying less on imported rPET feedstock) but also more environmentally responsible as a nation.

Before the shipping logjam occurred in the ports of Long Beach and Los Angeles, ships unloading containers of imports would be reloaded with containers of U.S. exports to head back across the Pacific, including a considerable amount of plastic scrap. As of 2020, the U.S. routinely sent 5,600 piled-to-the-brim containers per month overseas.

With the current situation, shipping companies have reacted to weeks-long unloading times by rejecting any containers for the return journey. Without the added weight, the ships can travel exponentially faster to pick up another load of consumer goods with higher freight prices—only to repeat the process.

For recyclers with bales of plastic, cardboard, paper, and more, a rejected ticket to ride has led to these materials piling up in warehouses. This presents an opportunity: What if America could fuel its own manufacturing sector and keep shelves stocked by recycling more?

A transition to such a system would require infrastructure, technology, and a change of thinking for how we treat and reclaim material.

Infrastructure & technology. By increasing our available feedstock like clean, uncontaminated PET plastic bales, U.S. production—and production investment—would improve dramatically. However, while MRFs (materials recovery facilities) are becoming more proficient at separating bottles from trash, single-stream recycling as a system is preventing the nation from achieving higher plastic recycling rates.

Thinking differently, multi-stream systems that keep recyclables clean and separated improve recycling dramatically—San Francisco’s 80% recycling rate is a testament to that. 

A step further, methods that skip the MRF entirely, like RoadRunner’s FleetHaul service, ensure plastics are delivered to a handler with a responsible, circular plan. With predictive algorithms for material volumes and proprietary routing technology, efficiency proves for substantially higher recycling rates for businesses across all recyclable material streams.

New thinking. Aside from encouraging Americans to put plastic bottles in recycling bins instead of trash cans, there’s new thinking that could provide a solution for multiple crises. Plastic water/soda bottles and polyester fibers are both composed of polyethylene terephthalate.

With 17M tons of textiles heading to U.S. landfills per year, discovering a way to reclaim rPET at scale from clothing could make an enormous impact. As it would turn out, it might be closer to a reality than you think: The H&M Foundation’s massive investment into what they call “The Green Machine” has been deployed in Cambodia’s textile sector. 

Whatever outcome, it’s a step in the right direction. And while the COVID-related supply shortages and resulting chain breakdown were nearly impossible to predict, with smarter recycling, the supply of rPET would be undisruptable.

 

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