Platforms and eco-consciousness drive innovation in the pulp and paper industry

Finland is a global leader in the pulp and paper industry. It’s an industry that’s undergoing rapid change and modernization. In this signal, we look at the significant impact platforms are having on the entire value chain of the industry, such as driving innovative developments in products and production techniques.

Once considered a traditional resource industry, pulp and paper producers have been forced to innovate and re-invent themselves in response to the rise of platforms such as eCommerce, online food delivery and e-mail. Growth opportunities are being created as eco-conscious consumers are demanding sustainable alternatives to oil-based plastics and foam. In response, pulp and paper companies are developing innovative ways to use wood fibres in packaging, cosmetics, hygiene, clothing, and electronics, among other things.

In a market that’s focused on improving margins and product quality while remaining price competitive, the internal operations of pulp and paper producers are benefiting from digital platforms such as smart sensors, Industrial Internet of Things (IIoT), big data and augmented reality (AR).

The pulp and paper producers that are likely to experience the highest rate of future growth are the ones that transition even further from being B2B or B2B2C entities toward being part of an ecosystem that focuses on close interactions between forestry suppliers, package printers, brand owners, retailers and end consumers, as well as other industrial sectors. Successful ecosystems will draw on multiple platforms and create what’s known as a “circular bio-economy” based on sustainable forestry, minimizing production waste products and greenhouse gases and maximizing recyclability.

The decline of paper

The advancement of digital platforms and eco-consciousness has resulted in a rapid slowdown in demand for traditional paper products since 2015 when the worldwide demand for newsprint and writing paper declined for the first time ever. Digital platforms for e-mail, news, and electronic payments have displaced paper products like newsprint, printing paper and banknotes. On the other hand, specialty papers, such as photographic paper, have been impacted by the rise of digital photography and photo-sharing platforms like Instagram, Google Photos, Flickr and Facebook.

The rise of packaging

While annual growth in the global paper and paperboard market has slowed, the segments experiencing rapid growth are tissue, packaging, and specialty papers such as food wrappers and labels. In the next 5 years, over half of this growth will occur in emerging markets, with China and India having the highest rates of growth as average incomes increase and shopping patterns change to include more packaged goods and online purchases.

eCommerce platforms create growth opportunities

The rapid growth of eCommerce platforms like Amazon and Alibaba is creating opportunities for the pulp and paper industry. By 2022, online sales are expected to make up about 15% of global retail spending. In addition to increased demand for shipping boxes and packing materials, the drive for increased sustainability is leading to the development of lighter and stronger packaging materials to reduce shipping costs and CO2 emissions during transport.

As eCommerce platforms look to improve operational efficiency and reduce the time needed to prepare packages for shipping, there’s demand for modular shipping boxes that can be filled quickly and are compatible with robotic and automated packing and fulfillment systems. Further efficiencies can be gained by the convergence of primary packaging (which contains the product) and secondary packaging (the shipping container) so the primary package is robust enough to be shipped without the need for secondary packaging.

Smart packaging is an emerging trend in both traditional retail and eCommerce markets. In some cases, smart packaging involves placing “invisible” markers that can be seen by mobile phone apps that tell consumers additional information about the product. In other cases, smart packaging is “active packaging” that contains sensors to monitor location, temperature, tampering, etc. For high-end luxury products, an active package may contain a Near Field Communications (NFC) chip so the end-user can validate the authenticity of the product.

Innovative pulp and paper solutions address the needs of food delivery platforms

Online food delivery platforms such as UberEats, DeliveryHero, Wolt, Fiksuruoka and ele.me are growing rapidly in most developed countries. By 2025 global revenue for these platforms is expected to more than double to USD$200 billion. Asia accounts for over half of the global market. While these global revenue numbers are impressive, it’s important to consider that currently only about 10% of the world’s population has access to online food delivery platforms. Along with online food delivery, demand is increasing for pre-packaged ready-to-eat meals and grab-and-go/take-out hot meals and salads.

As food delivery platforms grow, so does the need for packaging and containers. As consumers become more eco-conscious and some jurisdictions introduce legislation to limit single-use plastics, significant opportunities are being created for innovation and growth in the pulp and paper industry. Pulp and paper-based products, such as those from foopak and metsaboard are made from recyclable bioplastics and wood fibres, which are a viable alternative to replace oil-based plastic and foam used in packaging and utensils.

One important area of innovation is the development of eco-friendly barrier coatings. Because pulp and paper products absorb liquids and allow oxygen to pass, they must be coated to be used as food and beverage containers. Initially, many barrier coatings were oil-based plastics, which impacted the recyclability of the containers. Innovative new barrier coatings made from bioplastic and water-based materials, such as Protean, are now available and continue to evolve.

Platforms improving operations

The production of pulp and paper-based products requires complex processes and significant investment in facilities and machinery. Platforms are being used by producers to maintain product quality, production efficiency, and improve product margins. Big Data and the Industrial Internet of Things (IIoT) allow machinery to be monitored and fine-tuned. These platforms are also used to forecast demand, analyse production costs, and optimize product pricing. Augmented Reality (AR) platforms are being used to provide operators with real-time data and 3D animations to support training, operation and maintenance functions.

While some pulp and paper producers are implementing these technologies themselves, other producers are turning to technology partners that offer comprehensive service platforms. For example, Valmet, Metso, Andritz, and ABB offer service platforms providing equipment, proactive maintenance, analysis and optimization, control and (remote) operation of the production system.

Selected articles and websites

ABB – Integrated Solutions for Improved Pulp and Paper Mill Productivity
Andritz – A global service organization to ensure high plant availability and top-tier equipment performance
Anomera – Bio-Cosmetics
BBC – Could ‘invisible barcodes’ revolutionise recycling?
Domtar – Personal Care Products
Foopak – Paper Packaging Innovation
Forbes – The Soon To Be $200B Online Food Delivery Is Rapidly Changing The Global Food Industry
Institute for European Environmental Policy (IEEP) – The Circular-Bioeconomy in agriculture and forestry
Lenzing – Bio-Textiles
Making of Tomorrow – Creating a Bio-Based and Easily Recyclable Packaging Material
McKinsey & Company – Packaging solutions: Poised to take off?
McKinsey & Company – Pulp, paper, and packaging in the next decade: Transformational change
MetsaBoard
MetsaFibre Bio-Product Mill
Metso – Digitalization in pulp & paper – Optimizing processes based on valve performance data
Mondi Group – E-commerce Packaging
Mondi Group – Mailer Bag
Paper Advance – 5 key trends disrupting the paper and board market
Paper Advance – Finnish pulp and paper industry is on the move
Paper Industry World – The paper mills of the future available today
Platform Value Now – Platforms and Forestry
Proship Automated Packaging Solution
Protean Barrier Coatings
Pulp and Paper Canada – Consumer Demand for Sustainable Packaging to Boost Paper Coatings Market
Pulp and Paper Canada – Market Outlook: Pulp Prospects
RFID Journal – NFC Applications for Wine and Spirits Brands
Two Sides – The Smart Packaging Revolution
Valmet – Dialogue with Data Takes the Industrial Internet to a New Level
Valmet – Industrial Internet and Remote Solutions for Higher Process Yield
Vision 2040 of the European Forest-Based Sector
VTT – Greener electronics from spent grain and pine bark

Phill White

Research Scientist Global X-Network
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