We all know what is going on with the recent outbreak of the COVID-19 virus and its impact on every corner of our economy. By no means is this article meant to add to the hype, or to bring attention to our industry as being a “victim” or unfairly impacted – it is meant to educate the public.
Particular segments of our economy hardest hit are restaurants and the hospitality industry such as caterers and event planners. Others include the travel industry, airlines, and cruise lines. We can only hope that this comes to an end as quickly as it began to assist the employees and owners associated with these types of businesses.
But how can a pandemic like COVID-19 possibly affect the recycling industry?
Material comes in, is graded, sorted, processed, baled, shredded, etc., and then is shipped to numerous locations throughout the world. The problem is – many of these consumers are not buying. As manufacturing is shut down, the demand for raw materials decreases or stops. Without the demand for raw materials, such as scrap metal, paper, plastic, etc., it creates an oversupply, which drives down pricing.
There are many industries such as paper mills and metal manufacturers that can continue operations. The structure of these businesses allows them to put proper precautions in place to minimize employee exposure.
COVID-19 and the Global Economy
For these industries a problem still exists, and that is the impact on transportation. Many foreign manufacturers as well as domestic recyclers rely on export markets to remain viable. These overseas markets consume a large portion of domestic recyclables. If these countries are not shipping into the US with new product due to manufacturing shutdowns, this greatly reduces the amount of export containers available for outbound shipments.
Recyclable products, although important to the recycling industry – are not placed high on the food chain when it comes to export shippers. There are a number of higher valued products that can and do bring a premium when shipping to overseas markets. This also creates a roadblock for the shipments of recyclables.
So, not only are the markets for recyclables compromised, but the transportation equipment needed to get this material to the end markets are also impacted. Without a proper supply of export containers material is unable to get to the end market.
Let’s all hope this is a short-term problem, and everyone throughout the US and the world can get back on track soon. Its an unprecedented event that I’m sure everyone will be happy to put in the rear-view mirror.