The paper recovery system comes with many challenges. Two big ones are inefficiencies due to the fact that there are many players in a fragmented industry and inconsistencies in material quality. Yet, it’s a roughly $37 billion global market, so there’s opportunity out there. That’s why merQbiz, a Los Angeles-based company with an online platform for paper buyers and sellers, was launched. It’s intended to streamline transactions by connecting businesses directly, provide greater market reach and increase pricing transparency, which has typically been limited.
Open for business since January 2017, the company has an integrated platform “so you can buy and list paper, book logistics, manage invoices and receive payment in one place. This is new to the industry,” says John Fox, CEO of merQbiz.
Buyers and sellers can network beyond their geographic area.
Describing the platform as a digital marketplace similar to Amazon, Fox says buyers working in paper mills can make one call to source the paper from a broker or sometimes directly through the waste generator. At the same time, they arrange for transportation. The idea is to remove some of the traditional players to eliminate levels of complexity and cut costs.
Photos, specs and prices are posted online.
“Today, many buyers and sellers of waste paper don’t necessarily know the true value of a paper product,” says Fox. “They only have a limited perspective of the local market, so there is a lack of transparency. But here, they know what they get.”
Pricing traditionally runs off of a monthly issued index called the Yellow Sheet. But figures may not be true, as what’s listed on the first of the month is not necessarily the market price at the end of the month.
merQbiz provides real-time pricing, which could vary by $10 to $20 a ton from the beginning to end of the month, according to Fox.
While the company doesn’t set prices, he says, “We know at what prices customers are selling who trade day in and out, and that’s the nature of the market place. Buyers may be able to negotiate directly with the seller if they think the price does not reflect what the market appears to be.”
The platform was designed as a vehicle to additional outlets at a time when sellers are struggling to find alternative sources, due largely to China’s restrictions and bans on commodities. Businesses that use the service are shipping to both domestic and overseas markets.
Recovered paper is not sold as a finished product. Each shipment is different, and there is a wide spectrum of quality in terms of contaminants or moisture, so MerQbiz has quality inspectors that provide information on the quality of the material. The company will advise on the integrity of recovered paper “as we have a good idea of where [sellers or buyers] stand on quality with domestic and, more importantly, export markets,” says Fox.
Parent company Voith brings expertise in paper recovery, and Boston Consulting Group Digital Ventures provides digital and technical expertise. Most recently, the company began collaborating with global logistics service provider C.H. Robinson on the transportation component.
“If you buy paper through a broker, you have to figure out transportation costs, and you may not even know if you can get transportation,” says Chris O’Brien, chief commercial officer at C.H. Robinson. This is because you typically buy and sell, and then look for transportation later. But when merQbiz buyers get a price online, they get a quote for transportation.”
Reportedly the largest provider of truckload transportation in North America, O’Brien says the company can offer competitive pricing because of economies of scale. Its existing technology to track and trace orders is connected to merQbiz’s site, so when orders are placed, a confirmation goes out along with a link to track freight through its journey.
C.H. Robinson was already doing business in the paper industry.
“We had some of the same customers and an interest in expanding,” says O’Brien. “We saw the vision of merQbiz and its partners—to find efficiency in the marketplace and improve supply chains. We liked where they were headed, and what merQbiz was doing to benefit its customers would benefit our customers, too.”