OVERVIEW OF REVERSE LOGISTICS OF POST-CONSUMER WASTE IN BRAZIL

The destination of post-consumer waste is a topic that has been discussed worldwide in recent decades and has been part of a context of migration and sharing of responsibilities, previously understood as strictly governmental, for the industry.

European Union legislation on the subject already considers the industry at the center of decisions regarding the disposal of waste generated by its products, even after use by consumers. In the United States, it has not been different in most states. In Brazil, in 2010, the National Solid Waste Policy (PNRS) was enacted, which also points in this direction.

Figure 1 - Evolution of legislation regarding responsibility for proper waste disposal
Source: ILOS, 2012

In this context, the industry operating in Brazil is discussing with the government the best way to collect and dispose of post-consumer waste, what are its implications for costs, prices and what are its support needs.

This article aims to provide a brief overview of the Brazilian situation regarding the development and planning of reverse waste logistics operations.

Disposal of post-consumer waste in Brazilian companies

The first legislation on waste management had the greatest impact on the destination of industrial waste, later covering the destination of commercial waste and, currently, post-consumer waste (Table 1).

Table 1 - History of Brazilian environmental legislation and its implications for companies
Source: Authors

Considering this legislative context, it appears that companies operating in Brazil have different degrees of implementation of actions for waste management.

Figure 2 – Representation of companies that perform waste reverse logistics activities and main drivers
Source: ILOS, 2012

The actions related to the treatment of industrial waste are already better directed than the others, due to the fact that the legislation on the subject is older and the penalties are better defined. In a lesser stage of development, is the direction of post-consumption waste, whose legislation was recently enacted and is still in the period of detailing targets and penalties.

According to a survey carried out by ILOS in 2012, when it comes to the disposal of post-consumption waste, activities are carried out mainly by the Environment/Sustainability and Logistics areas of the companies, with the Environment area being responsible for 27% of cases and Logistics, by 22%. In 5% of the companies, the two areas work together. This comes from the fact that the disposal of industrial waste was the first legal framework enacted in the country and, in order to correctly follow the recommendations, several companies created the Environment area. Logistics participates in these activities when waste collection and disposal operations are more complex and require greater technical support.

Reverse chain for post-consumer waste disposal in Brazil

As is already known, the operation for the disposal of post-consumer waste involves different agents. According to the ILOS survey, logistics operators and raw material suppliers are currently the main agents in this reverse chain, being used by more than 90% of the companies that carry out an operation of this type in the country.

Figure 3 – Stakeholders involved in the post-consumer LR process
Source: ILOS, 2012

It should be noted that some companies have had difficulty including, in the waste disposal process, some agents, such as collectors' cooperatives (which are part of only 26% of current operations) and retail (which is present in 53% of cases).

The difficulty of including collectors' cooperatives in the post-consumer waste disposal process is strongly related to the fact that they are not recognized by companies as independent operating agents, needing support for the implementation of a physical and management structure. In the case of retail, the main difficulty is in the organization of the secondary waste market in Brazil, recognized as a low-performance market.

The profitable allocation of waste in the secondary market is an activity that requires expertise in mapping opportunities and building a highly complex network of contacts. In the United States, companies such as Genco offer a profitable allocation service, a service currently not available in the Brazilian market.

Figure 4 – Main difficulties for implementing the post-consumer RL operation
Source: ILOS, 2012

Still bearing in mind the difficulties encountered in the implementation of reverse operations, we have the fact that post-consumer waste can have a much greater geographic dispersion than that existing in the supply chain, as it can be household waste. This high dispersion leads to the search for volume scalability to reduce unit costs.

The operational cost of the reverse chain is highly relevant, considering that the added value of the waste is low, making it difficult to recoup the costs incurred through the process of recovering and selling the collected material.

Obtaining the necessary volume scale to reduce costs is strongly related to the development of joint actions between companies, thus requiring effort to build partnerships or even to build/identify consolidating agents.

Despite the possible additional costs for the reverse operation, only 36% of companies imagine that product prices will be impacted as a result of its implementation; against 27% of companies that believe in the possibility of price reduction and 37% that think there will be no change.

This situation can be understood in light of the different opportunities for changing market positioning that companies in each sector envision:

• Absorb the costs of the reverse operation within the product's margin in favor of image benefits that can increase its competitiveness in the market;
• Earnings from the sale or reuse of waste that enable price reductions;
• Opportunity to reposition the prices of products that have a reverse operation, considering this an activity that adds value to the product;
• Transfer of costs to the price of products, given that the unit cost will occur for all companies in the segment.

Current stage of implementation of reverse logistics operations in Brazil

The National Solid Waste Policy (PNRS), enacted in 2010, provides for the mandatory creation of a reverse logistics system, establishing shared responsibility for the correct final disposal of waste generated by seven different classes of waste: 1) packaging and waste from pesticides, 2) tires, 3) lubricating oil packaging and waste, 4) electronic products and components, 5) batteries, 6) fluorescent lamps (sodium vapor, mercurial and mixed) and 7) packaging.

In this context, reverse logistics becomes the responsibility of producers and, as a result, companies have been seeking to integrate their post-consumption operations through sectoral associations. In this way, they find synergies to increase the geographic area served by the program and the volume of waste collected and properly disposed of, reducing the cost of the reverse operation and facilitating its management, among other benefits.

From this new need, management entities emerged, with the objective of fully controlling the reverse chain of post-consumption waste and ensuring that the collection and disposal targets established with the government are met at the lowest cost.

It is important to emphasize the existence of differences in the maturity level of the reverse chain of the different product classes described as mandatory in the PNRS. As shown in Figure 6, so far, there are already structured processes for “pesticide packaging and residues” and “tyres”, both coordinated by management entities – the National Institute for Processing Empty Packaging (Inpev) and Reciclanip, respectively. It is worth mentioning that both classes were regulated about ten years ago, based on resolutions of the National Council for the Environment (Conama), undergoing a differentiated implementation process.

Figure 5 – Development of tire reverse logistics
Source: Authors

Figure 6 – Discussion stage on the reverse logistics implementation plan by items
Source: Authors

These two cases follow similar models for the operationalization of reverse logistics. In both, the collection takes place through reception points, from which the waste is sorted and will be properly disposed of (reuse, incineration, generation of energy and new inputs, among others).

For the tire sector, the main success factors in the implementation of this initiative were: the existence of a regulatory framework, the development of a solution by the sector association (Anip), the constitution of an independent management entity (Reciclanip) and the recognition, by consumers, of the importance of work in a context of sustainability.

Inpev started its activities in 2002, having since then invested more than R$450 million and collected around 220 million tons of empty packaging. Currently, the institute's operation collects and disposes of around 80% of the total packaging sold, reaching 94% for plastic packaging, making it a world reference.

With the exception of pesticide and tire packaging, the other product classes are still in the discussion stage of alternatives with the government, through class associations, on the regulation (goals, penalties) of the PNRS, therefore there is no process unified and national instituted.

Abinee is the association that is leading discussions with the government regarding batteries and electronic products and components. These sectors have found it difficult to discuss with the government to define the representativeness goal of the total volume to be collected. This difficulty is mainly due to the fact that there is a significant volume of pirated products in the Brazilian market. The alignment between the associated companies to design a joint operation is also a challenge, as there is a view that a single operation will reduce the customer's perception of the environmental advantages related to the product, which may impact a change in market share.

In parallel with discussions with the government, companies and groups of companies are working on independent initiatives for the reverse logistics of post-consumer waste.

With regard to packaging, Tetra Pak has invested in education focused on selective collection through educational leaflets and the Rota da Reciclagem website, in addition to training cooperatives and setting up collection points. With this work, the company has managed to properly collect and dispose of around 20% of the packages placed on the market, helping to generate income for the cooperatives.

In addition to the sectors mentioned in the PNRS, others will be invited to participate in the process in the coming years, such as medication, which was invited to participate in the process in 2012.

Conclusions

The implementation of post-consumer waste reverse logistics operations is being driven in Brazil, mainly by the legislative development on the subject and by the attraction of consumers for actions aimed at sustainability.

In this context, in the coming years, we should observe significant changes in the area of ​​urban solid waste management in the country, in the development of sectors related to the theme and in the modus operandi of market competition.

Bibliographic reference

ILOS, Brazilian Panorama of Post-Consumer Waste Reverse Logistics, presentation by Gisela Sousa, Mega Session: XVIII International Logistics Forum, August/2012*

*Participating in the Mega Session were: Fernando Von Zuben, Director of Environment Latin America at Tetra Pak; Fabio Neiva, Goodyear's Latin America Logistics manager; André Cordeiro, Director of Supply Chain Latin America at FMC Corporation; André Saraiva, director of the Socio-environmental Responsibility Area of ​​the Brazilian Electrical and Electronics Industry Association (Abinee) and executive director of the Shared Environmental Responsibility Program (PRAC); Edgar Blanco, Director of Research at the Center for Transportation and Logistics at the Massachusetts Institute of Technology (MIT), USA; moderated by Dale Rogers, Practice Leader in Sustainability and Reverse Logistics at ILOS and professor at Rutgers University.