FRANKFURT, Jan 22 (Reuters) - MerQbiz, an online marketplace for recycled paper, is teaming up with U.S. logistics giant C.H. Robinson as a Chinese ban on imports of scrap paper pushes the fragmented industry to become more efficient.
MerQbiz, a joint venture of German engineering group Voith and Boston Consultancy Group, matches up buyers and sellers of recovered paper, an approximately $30 billion market where many transactions are still carried out by middlemen armed with contact books, phones and faxes.
The partnership with C.H Robinson will allow buyers and sellers of recovered paper products to book transportation on the MerQbiz platform at the same time as placing an order, giving a total overview of costs at the time of purchase.
“The important thing is the total cost - paper plus transportation,” MerQbiz Chief Executive John Fox told Reuters by telephone. “When you purchase the paper now you’ll know exactly what it’s going to cost you delivered to your site.”
C.H. Robinson makes around 7 percent of its net revenue from the paper industry.
“We know the paper industry and we see the inefficiencies in it,” C.H. Robinson’s Chief Commercial Officer Chris O’Brien told Reuters by phone. “This is going to drive volume.”
China, the world’s biggest recycler of scrap paper, stopped accepting mixed paper that is often contaminated with food waste - along with many types of plastics - at the end of last year as part of a campaign against “foreign garbage” it said was polluting its environment.
The move has caused pile-ups of unwanted recyclables around the world and depressed prices.
“It’s had a huge ripple effect on North America and Europe. A lot of it used to go to China and now China doesn’t want it,” said MerQbiz Chief Executive John Fox. “There’s pressure on the industry to become more efficient - absolutely.”
California-based MerQbiz was set up by Voith, a German family-owned multinational with 150 years of experience in paper making, and BCG Digital Ventures last year with a investment of $50 million.
By creating a marketplace with real-time prices, it aims to bring transparency to the industry. Both it and C.H. Robinson say it is the first of its kind, though other similar businesses are now cropping up.
C.H. Robinson is focused on the United States but has a worldwide presence with more than 100,000 customers.
It also faces competition from startups aiming to unseat traditional trucking brokerages with new technology to grab a slice of the $700 billion-a-year trucking industry, which still relies heavily on call centres and fax machines. (Reporting by Georgina Prodhan; Editing by Mark Potter)