Setting sail: exporting recovered paper to mills in China is the backbone of America Chung Nam's business - America Chung Nam Inc

Recycling Today, June, 2002 by Brian Taylor

The steady presence of ACN has been appreciated by many recyclers, Wang believes. "When we first came into the business in the early 1990s, export to China was kind of regarded as secondary or unfamiliar to a lot of packers," he remarks. "China was considered kind of a mysterious market then, and some packers weren't sure they could rely on us. Also, there are a lot of trading companies that come and go. We had to prove ourselves to the industry--that we are here for good and we know what we're doing."

The way ACN is set up--as a dedicated buyer that owns the mills it is supplying back in China--may be part of the reason it has succeeded with American recyclers. The owners of ACN understand the crucial role long-term, stable secondary fiber procurement plays in a mill's success. "It's a relatively rare set-up," says Wang, "especially with the amount of tons actually going through a buying office in the U.S."

The company and its officers also stress the need to foster good long-term relationships with its suppliers. Wang again hints that the company will likely back away from further growth on the processing side in favor of building strategic alliances with recycling facilities.

"It's quite likely we'll find some joint venture partners here in the U.S. on the scrap paper procurement and processing side," says Wang. "I don't think we're planning to do much more on the direct processing side; we don't wish to compete too much with our suppliers head-to-head. It offers a better future to partner with them."

TOP OF THE HEAP

America Chung Nam Inc. is the number one container exporter in the U.S. Several other paper companies are also among the leaders. Read more in an exclusive online sidebar at www.RecyclingToday.com.

RELATED ARTICLE: the return trip.

Recyclers are quite familiar with the advantages of backhauling--providing a load to fill a truck or rail car that is already scheduled to move from point A to point B but can accept cargo to take back on its return trip.

Shippers who are positioned in population centers that receive more cargo than they ship out can often secure the lower freight rates associated with backhauling.

That is a position currently enjoyed by some Pacific Coast shippers as they broker scrap paper to send from the U.S. to China.

China is in the midst of a manufacturing and export boom, shipping container after container of manufactured and semi-manufactured goods to the U.S.

The shipping lines and agents sending those containers in one direction inevitably look for any potential cargo to haul in the other direction.

Companies that ship goods from the U.S. to China--including paper recyclers--are thus exposed to some favorable shipping rates, as a container filled with scrap paper, even if booked at a low rate, is a better option for the shipping companies than sending an empty container across the Pacific Ocean.

RELATED ARTICLE: the European balance of power.

If the Chinese recycled paper market was America's oyster alone, that might suit American paper recyclers just fine. But companies such as America Chung Nam Inc. (ACN), Pomona, Calif., are aware that to obtain scrap paper at optimum pricing levels and in sufficient amounts, accessing European sources can provide a needed balance.