By Kenneth Norris, Deputy Editor, IFPTA Journal
BRUSSELS,
Sept. 26, 2008 (RISI) -
Innovation is often found in the most unlikely places. Buried deep in the stacks last week was an interesting press release from UPM boasting of a "new innovative transportation system." What made this release interesting, coming from one of the largest forest products producers, was the dizzying array of initiatives included in the project: logistics integration, inland transport, recovered paper, and environmental awareness. More importantly, this confluence of ideas intersected in an area that might seem to be the traditional space for a logistics company, not a paper producer. If this is what UPM had in mind by 'new' and 'innovative', then this certainly might appear to fit the bill.
The press release, titled "UPM swaps the road for the river in France," outlined the use of river barges to carry finished paper products from the UPM Chapelle Darblay mill in Rouen to the end-users in the Paris area. The barge then returns to the mill loaded with a shipment of waste paper from collection centers in Paris. Using this recovered paper, UPM manufactures paper rolls which are then used by the printers of the major daily newspapers in Paris. The finished paper rolls are transported along the same waterway system.
The primary benefits of this system, according to UPM, are the environmental considerations. By using river transport, UPM estimates it should decrease the amount of trucks on French roads by 4,500 each year, cutting fuel consumption and carbon dioxide emissions by up to 40%. Alone, this should be a noteworthy project. But given the rising cost of fuel, in terms of costs across the entire supply chain and the resulting increases passed along to the consumer, it's hard not to wonder about the projected cost savings this system could produce. As important as it is to reduce the congestion on the roads, it seemed surprising for UPM not to mention the most obvious savings: transport costs.
Combining the environmental initiatives of inland transport and recovered paper is also especially provocative, and not just because both are receiving a good deal of press right now. Inland transport along waterways is a hot topic in the European Union these days as the overall transport industry looks to new solutions to alleviate road congestion and curb high fuel costs. Two inland waterways, the Seine-Scheldt connecting Western European seaports to France and Belgium and the Straubing Vilshofen section of the Rhine-Main-Danube Corridor, are slated for major upgrades and development to address these concerns. But the focus of using river waterways extends beyond environmental concerns. If European freight transport is to continue growing, many believe the rivers are the only economically viable solution.
Recovered paper is at the very top of the environment list. There have been more than a few reports of the record levels of paper recycling in the EU, and the efforts to achieve a recycling target of 66% in the EU by 2010. But, again, this importance is more than just environmental awareness. Recovered paper is increasingly seen as a valuable raw material for forest products producers. With recovered paper prices on the rise, UPM's ability to lock in a dedicated source, in partnership with waste paper collector SYCTOM, is another important cost measure. By creating a closed-loop system of raw material to finished product, the company's system not only mimics many naturally sustaining organic systems, but also looks to buffer itself against fluctuating prices and supply which would prove economically disastrous for similar projects.
With UPM's announced restructuring to take place on December 1, 2008, it is exciting and encouraging to see a major market contributor continuing to apply a concerted environmental approach to its new projects. The fact that environmental initiatives are closely aligned to cost savings and improved financial stability also means an increased likelihood these projects will succeed in the long run. And by cooperating with a traditional logistics provider, this type of project allows for economies of scale that would be unavailable to either company alone, which in turn benefits the industry as a whole. And, in the end, this really does sound rather innovative after all.
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