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
Interpreting the platform economy against landscape-level change factors
The Prime Minister’s Office in Finland published in late 2017 a list of change factors of the global landscape, with the aim to familiarise decision-makers as well as citizens with the changes and uncertainties we will face in the future. The result of fifteen key factors of change was produced in collaboration with experts across ministries and their strategy work. They also provide the basis for dedicated futures outlooks by various ministries to be published later in 2018.
The fifteen change factors each introduce the identified change and describe the situation until 2030. Additionally, alternative paths and development directions are offered. Rather than predictions, the change factors help prepare for various alternatives around the identified change topics, all the while acknowledging uncertainties.
In this signal post, the fifteen change factors are briefly analysed in the context of the platform economy. The idea was to formulate statements as questions and portray the alternative ways the change factor may be expressed in the platform economy. Some of the change factors can act as high level trends that steer platform development from afar, whereas others have very straightforward impact mechanisms. On the other hand, platforms themselves can influence the change factors and contribute to how the changes take place. The objective of this analysis is to help to map the potential with the platform economy regarding both opportunities and threats in the changing societal landscape. In fact, as the platform economy evolves, any of the issues identified may take a positive or negative turn or a combination of the two.
Political
- International order in transition
- Will the USA host as the basis for leading platform companies?
- Can China and the rest of Asia challenge the US leadership?
- Will platforms act as enabling tools in international policy-making?
- Will platforms be used as enabling tools for conflicts and corruption?
- Development of the EU and national states
- Will the EU develop into a competitive and uniformly close-knit platform economy?
- Could we face a failure of joint EU activities in the platform economy?
- Are there going to be nationally or regionally confined platform economies?
- Changes in democracy and multiform participation
- Will platforms act as enablers of accessible knowledge and the information society?
- Will platforms be used to spread polarisation and misinformation?
- Will platforms be employed as tools to societal participation in democracy?
Economic
- Global economy in transition
- Are we going to see globally reigning platform monopolies or local platform economies?
- Is the economic growth from platforms around the world going to be even or uneven?
- Will platforms support quick profits or sustainable growth?
- Economic development in Finland
- Will Finland succeed as a balanced platform economy on its own?
- Is Finland going to excel in its niche areas in the global platform economy?
- Will Finland remain a minor actor in the platform business?
- Transition of work
- Is all work going to be gig work on platforms?
- Could education, training and skills be provided on platforms on an on-demand basis?
Social
- Demography and urbanisation
- Can platforms bring along a counter-trend to urbanisation and migration?
- Could platforms help to solve challenges related to ageing?
- Will platforms be used as connectors between culturally or demographically differing groups?
- Changing values and attitudes
- How will ethics and values be incorporated into platforms?
- Could different platforms support variability in choices on lifestyles and values?
- Will platforms be used as a destructive force?
- Inequality and disparity
- Will platforms be employed to empower women and build equal opportunities globally?
- Will platforms be used to aggravate polarisation of individuals and nations?
- Can platforms contribute to accessible human health and wellbeing?
Technological
- Technological transition
- Will blockchain, AI, robots, etc. be employed successfully in platforms?
- Is the role of platforms and advanced technologies to be in control or as a subordinate?
- Could we face technological underachievement and failure of the platform economy?
- Will data be the currency of the future technological platforms?
- Digital competences in public administration
- Will the public sector be active in platform management and participation?
- Is public administration going to be incapable of deploying digital platforms in their own processes?
- Can the public sector keep up with platform markets?
- Resilience of critical infrastructure
- Will platforms bring intelligence into infrastructure management?
- Will we be able to ensure resilience regarding digital infrastructures and cyber security?
Ecological
- Climate change
- Could platforms and advanced technologies contribute to effective agreements in climate policy?
- Will digital platforms increase or decrease the overall environmental burden?
- Could the platform economy provide the means to survive with climate change impacts?
- State of environment and nature
- Could platforms facilitate monitoring of natural and built environments?
- Sustainable use of natural resources
- Could platforms be used as enabling tools for material and resource management, e.g. recycling?
- Will sharing platforms promote effectively sustainable, resource-efficient lifestyles and economies?
- Will unsustainable consumption patterns spread uncontrollably because of platforms?
- Are platforms, data and related technologies going to increase energy consumption exceedingly?
Selected articles and websites
The environmental footprint of the platform economy
The platform economy is inevitably responsible for a myriad of environmental impacts, both positive and negative. These impacts are, however, difficult to identify and measure because of the complex impact chains and rebound effects. Very little research results (especially quantitative) on the topic exists at present moment. In the accompanying video, we list some key factors of the environmental footprint of the platform economy relating to (1) technology, (2) digitalisation and (3) patterns of consumption and production.
Technology
Platforms, as any other digital products and services, rely on large volumes of data centres and computing power. These require considerable amounts of energy, especially in the form of electricity and cooling. On the other hand, in the most hands-on meaning of technology, we need various devices to access platforms. Production of smart phones, tablets, computers, etc. is resource consuming and new models come up constantly. Short-lived, out-dated devices end up as electronic waste.
Digitalisation
Intuitively one might assume that through digitalisation, the platform economy would replace physical and material functions with digital and virtual solutions, and thus diminish use of natural resources and reduce harmful environmental impacts. But in fact, oftentimes platforms have a way of mixing the virtual and physical worlds, in some cases even accelerating material transactions. Secondly, digitalisation enables a global outreach, which in turn can increase global logistics. We have already seen this phenomenon with ever-growing online market places with global user populations.
Consumption and production
Perhaps the most intriguing and crucial factor is the question of consumption and production patterns in the platform economy. It brings us to analyse issues such as societal values, user behaviour, business strategies and political agendas. Will our underlying objective within the platform economy be “more with less”, “more and more” or “less is more”? The topical concepts of the circular economy and sharing economy highlight sustainable and responsible aspirations. In the optimal case the platform economy can align with these concepts and for example implement in practice innovations that promote access instead of ownership.
Selected articles and websites
World Economic Forum: How can digital enable the transition to a more sustainable world?
MRonline: The hidden environmental impacts of “platform capitalism”
Government of the Netherlands, Ministry of Economic Affairs: Argument map The Platform Economy
Bemine, Emma Terämä: Sharing – more common than ever & an integral step on our way to sustainable consumption
Problems with blockchain
A lot of hopes are placed on blockchain technology. They range from more modest aspirations, like ensuring secure food chains, to hyperbolic claims of creating economic and socio-political emancipation of humankind. Blockchain is said to offer a decentralised way of doing things while solving the problem of trust, which makes it very appealing for platform economy. What is often left out is the consideration of the negative consequences and the barriers to the wide adoption of the blockchain.
Negative consequences and barriers
The main negative impact on current implementations of blockchain relates to energy usage and consequential environmental and other impacts. Blockchains require a lot of computing power, which in turn requires a lot of electricity and cooling power. For example, for Bitcoin alone it has been calculated that by 2020 it might use as much energy as Denmark. While blockchain-based solutions – or cryptogovernance in general – has been offered as a way to alleviate some environmental problems by increasing traceability and ensuring ownership, the negative impact of these solutions to the environment should not be ignored.
The current architecture of the blockchain is high on energy consumption, and also has problems with scaling. The root problem is that all transactions in the blockchain have to be processed by basically everyone and everyone must have a copy of the global ledger. As the blockchain grows, more and more computing power and bandwidth are required and there is a risk of centralisation of decision making and validation power in the blockchain as only a few want to devote their efforts to keeping the blockchain running.
Along with problems of scaling, the issue of governance in blockchains is an unsolved challenge. Since there is no central actor, there needs to be mechanisms for solving disputes. The forking of The DAO and the discussions around it are a case in point. So while blockchain may offer new decentralised solutions to governance, the technology in itself is not enough.
Possible solutions
There are some solutions to the problem of scaling, such as increasing block size, sharding (breaking the global ledger into smaller pieces) and moving from proof of work consensus mechanism to proof of stake. One interesting solution that also decreases the computational power needed is Holochain. Instead of having a global ledger of transactions, in a holochain everyone has their own “blockchain”, and only the information needed to validate the chains is shared. This means basically that while a blockchain validates transactions with global consensus, a holochain validates people – or to be more precise, the authenticity of the chains of transactions people own.
Whatever the technological solution, a discussion on the negative consequences of blockchain is required to balance the hype. Do we want to implement blockchains everywhere no matter the environmental costs? What are the tradeoffs we are willing to make?
Selected articles and websites
- Hackernoon: Blockchains don’t scale
- Motherboard: Bitcoin could consume as much electricity as Denmark by 2020
- Coindesk: Blockchain’s 4 biggest assumptions
- Cointelegraph: Why blockchain alone cannot fix the privacy issue
- Cryptocoinnews: Blockchains will enhance the economic and socio-political emancipation of humankind
- Nature: The environment needs cryptogovernance
- Ensia: What can blockchain do for the environment?
- Ceptr: Holochain