New Chinese restrictions on imported waste, introduced since 1 January, are set to have significant implications for the international freight transport, logistics and supply chain sectors – particularly for backhaul east-west intercontinental container shipping trades, although the changes are also likely to lead to rising costs to supply chains from higher packaging costs.

China announced last July that from 1 January it would impose much stricter quality restrictions on imported cardboard, as well as banning the import of 24 types of waste material, including plastic and mixed paper, as part of president Xi Jin Ping’s drive to clean up China, environmentally.

The new quality standards mean cardboard will only be accepted by China if the material is almost completely uncontaminated with other waste products: contamination rates must be below 0.5%, rather than the 1.5% previously applied. This means cardboard that still contains staples or is contaminated with dirt could be rejected and sent back on container ships to the countries of origin.

Countries including the US and the UK export millions of tonnes of cardboard and other waste products to China each year for recycling, but some or all of this could be rejected under the new restrictions. Indeed, container line Maersk reported a drop in waste cargo into China even before the 1 January changes, but expected some measure of rebound as exporters adapt to the new regulations.

Other lines, such as Hapag-Lloyd, told customers as early as last September that they would stop accepting cargo of scrap plastic and waste paper from Europe, the US and Asia that are due to arrive at Chinese ports after 31 December.

Peter Sand, chief shipping analyst at shipping industry association Bimco, stressed that the changes did not amount to a total ban on imported waste products, but on the import of 24 of the dirtiest and most polluting types of waste, ranging from household plastic waste to unsorted paper, and recycled textiles to slag.

From a shipping perspective, Sand noted that the restrictions from China were “actually a technical trade barrier, hindering trade”, and as a result the World Trade Organization had notified its members and widely debated the ban. But in spite of these concerns, the changes came into force at the start of 2018.

One source estimated that scrap and waste products make up the sixth largest US export to China, although data from MDS Transmodal and Bimco indicates that ‘pulp and waste paper’ together form the single biggest category of containerised exports from the US to Asia (based on SITC2D trade classifications − Standard International Trade Classification at a two-digit level), making up almost 1.5 million teu per year. ‘Ores and scrap’ come in fifth at more than 300,000 teu; ‘plastics in primary forms’ are sixth at nearly 300,000 teu; ‘textile fibres’ are eighth at more than 250,000 teu; and ‘paper and paperboard’ are reported to be the ninth largest category of containerised exports from the US to Asia at more than 170,000 teu per year. Some of these may be included in the ban, sources say.

“Waste paper in particular, but also scrap plastics and metal scrap, are among the more significant back-haul cargoes for container shipping lines,” Sand told Lloyd’s Loading List.

He confirmed that volumes of waste going into China had already been decreasing. “In the second half of 2017, after the announcement of the ban, trade into China involving now-banned materials already started to drop,” he said. “By the start of 2018, many or all lines have stopped accepting cargoes of this kind destined for a Chinese port.”

Sand stressed that container lines make the majority of their money on front-haul cargo – “in short containers sailing from the East to the West” – although the effects of the changes were likely to be significant.

“Going back, container lines aim at covering costs by transporting low-value cargoes, while repositioning their ships,” he noted. “Not only container lines are affected by this; dry bulk shipping also transport scrap metal around the globe.”

He added: “In short, container lines will lose revenue and money on back-haul trades; China is the largest importer of many waste materials – a trade pattern that has been growing for decades. Depending on where the waste will now be sailing to − if sailing at all – the import will become less or more significant to shipping.”

Source: Lloyds Loading List

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