Overhauling Shipping Container Congestion on the USA Ports Puts Recycled Plastic Exports in Jeopardy
- 22-Nov-2021 6:40 PM
- Journalist: Henry Locke
The incessantly growing supply-chain crisis on the USA ports has suddenly gained limelight when the President of the USA, Joe Biden, took a grim look at the situation beseeching private businesses, port, and union leaders to make strategies for removing the immediate constraints and searching long-term remedies for vulnerable spots in the logistic system.
The clogging of cargo-loaded ships, which are forced to stay idle on the USA ports due to the lack of containers, has become a common scenario since the third quarter of 2021. A consequent surge in the container shipping spot freight prices is being witnessed for the traded materials, adding to their overall costs and compelling the end-user industries and customers to pay higher.
Amid the ongoing chaos, the recycling industry is foreseeing the USA’s looming container crisis as a major threat to its business. The reason behind their fear arises from the fact that shipment preferences may soon shift in the favour of high value-generating products for a few months until the container shortage eases out. As per a general trend in the USA, shipping companies tend to prioritise imports over exports which are mostly lower paying. Also, recycled plastics is the source of generation of a decent value of revenue in comparison to the high value generating pristine products. Adding further to the misery, the shipping companies are keen to take the empty containers to ports of major exporting countries. Hence, the USA is forced to witness the retreating of empty containers to China, one of the largest exporters in the world, as the logistical disadvantages prevail over the payment done by the USA exporters.
The supply challenges got triggered by the COVID19 pandemic which crippled many industrial sectors including the shipping industry due to the lockdown constraints, lack of workforce, halted manufacturing, and logistic processes. With the rebounding of most of the industrial activities after the contracting pandemic effects, the unexpectedly high surge in commodities’ demands is causing the logistics companies to struggle to keep up.
Polyethylene Terephthalate (PET) bottles are the most widely recycled plastics in the USA. 29% of the annually discarded PET bottles are collected, out of which 21% of PET bottles are recycled. PET is derived from the polymerization of ethylene glycol with terephthalic acid under high temperature and low vacuum pressure conditions. It is a lightweight, transparent, and flexible plastic that is heavily used in the food packaging, automotive components, and construction sectors.
As per ChemAnalyst, the supply challenges, which have taken the whole world under its grip, are not expected to ease out before mid-2022. Efforts have started on building the capacity of containers on the ports, but the manufacturing process will take time and cannot be viewed as an immediate solution. The recycled PET held around USD 8.6 billion market in 2020 and is forecasted to see over 5% growth in its demand in the coming 5 years due to the growing awareness among the population and the pouring support from environmentalists. However, the present condition poses a threat to the circularity of PET as the possibility of getting side-lined in the maritime trade movements will hamper the profitability of the producers and may result in the supply shortage as well as the hike in recycled Polyethylene Terephthalate prices in the international markets.