Corner Brook newsprint mill takes business all the way to India to avoid U.S. fees
Kruger-owned mill takes business elsewhere after U.S. imposes high export duty
The Corner Brook Pulp and Paper mill is shipping 4,000 tons of newsprint directly to India by vessel this week.
It will cost about $500,000 to ship the freight (almost 10,000 rolls of paper) all the way to India, and staff with the mill say the total cost is comparable to shipping to the U.S.
"It's no doubt the U.S. tariffs have had an impact on our industry and on our business. What you see here is us expanding to the export markets," said Darren Pelley, vice-president and general manager of Corner Brook Pulp and Paper.
"In the beginning of the year we were about 65 per cent to the U.S. That is reducing as we move into the export markets. We project by the summer to be lower than 40 per cent."
The Kruger-owned mill on Newfoundland's west coast was hit by an export duty totalling 32 per cent to the cost of newsprint headed for the U.S.
The mill started to look at ways to direct ship to export markets early in 2018. This is the first shipment of this kind to India with crews working 12-hour shifts to load newsprint aboard the MV Scheldegracht.
It will take six days for the 4,000 tons of paper to make it on board the vessel. The shipment will go straight to Europe, avoiding typical shipments to American east coast, before continuing on to India.
"The ability to move this paper in a cost-effective manner to India just shows great potential for the mill and the community," said John Sveistrup, director of Spleithoff Canada.
India growing market
Sveistrup works in sales and distribution of mill paper and says his business and his clients are shifting their focus away from the U.S. and looking more towards places like India, where the population is growing and there is still a high need for newsprint.
"There is an opportunity here to be had, so it's just a matter of everyone keeping their costs in order and I think there is great possibilities with the growing market in India versus in North America, where it is receding," he said.
"India is a growing market with an annual nine per cent annual growth, compared to the U.S., [which] has a nine per cent decrease in consumption."
The U.S. tariffs have changed the way Spleithoff and his clients do business.
Lot of change taking place
"Everyone is changing their delivery and sales patterns. There is a lot of change taking place, absolutely," he said.
Even though 4,000 tons of paper is a very large shipment for Kruger, the vessel will be only about half-full when it leaves the dock Saturday.
Pelley, who's been general manager for two years now, said he believes the volume of orders will increase over the next few months with the costs to ship to India very comparable to the cost to ship to the U.S.
He said the Corner Brook Pulp and Paper mill will be open and running for many years to come.
ABOUT THE AUTHOR
