Retail & logistics’ biggest challenge of 2022: implementing the Deposit Return System

Mihai-Alexandru Cristea 18/02/2022 | 16:28

BR’s recent re:FOCUS on eCommerce, Retail & Logistics, held on February 10, 2022, at the Courtyard by Marriott Bucharest Floreasca, featured 3 engaging panels in which leading retailers, couriers, logistics and commercial developers, and eCommerce major players shared valuable insights, best practices, challenges and opportunities of their respective industries. However, the closing panel of the conference was, for the first time in the history of BR’s re:FOCUS on eCommerce, Retail & Logistics, dedicated to a special topic which industry experts view as retail & logistics’ biggest challenge of 2022: implementing a fair and functional Deposit Return System (DRS).

 

Speaking from the re:FOCUS on eCommerce, Retail & Logistics stage, Cosmin Teodoru, General Director at the Romanian Ministry of Environment, Water and Forests, Julia Leferman, General Manager at the Brewers of Romania Association, Alice Nichita, President at the National Soft Drinks Association (ANBR), Bogdan Purcherea, Managing Director at Envipco Holding, and Emanuel Parvulescu, Head of Environment at Cora, and moderated by Ionut Georgescu, Founder & CEO at FEPRA, explored all the aspects surrounding the implementation of the Deposit Return System in Romania.

A very passionate supporter of the DRS, moderator Ionut Georgescu kicked-off the panel by saying that he had been waiting for this project for several years now. “DRS could change the Romania in regards to how we treat our packaging and the waste resulted from it. This project has the potential to create a functional circular economy system in our country.” Georgescu opened the talks.

 

DRS, the most important sustainability project implemented in Romania

Not just from an investment perspective, the DRS is certainly the biggest and most important sustainability project to happen in Romania in the past 30 years. Education and raising awareness towards this issue will be paramount in the near future, in order to create a fair and functional system. However, from a logistics perspective, the DRS seems like a herculean task, taking into account how many stakeholders have to be involved to create a working system.

“It is indeed the biggest environmental project in Romania, which will involve lots of energy and resources in order to become functional.” Believes Julia Leferman. “By the end of 2025, many changes will have to occur across the whole chain, starting from producers, because it all starts with them.”

Producer responsibility is crucial in implementing a system that won’t just tick off some recycling quotas on paper, but to actually create new packages from the collected waste, closing the circle on the entire system.

“Specifically, it’s this entire circuit of the used package which makes the object of the DRS. From its starting point with the producers, we will also need functional collection centers from retailers. This is where a very important aspect intervenes: the consumer’s facility. For the consumer, this system needs to be as easy as it gets. This means we need to create a nation-wide system, that will enable consumers to recover the deposit wherever he might, and that will put into operation an entire logistics network for recovering the used packages brought by consumers at the collection centers, and finally reaching the recycling centers.” Explains Leferman.

 

Closing the full circle: from producers to retailers, from consumers to recyclers (via distributors), and from local authorities to national policy-makers

In Romania, beverages producers use around 120 distributors for one of their products to complete the supply chain and reach the final consumer. Those distributors use around 3500 vehicles, which often times return empty loaded. Utilizing those empty vehicles might be one solution to solve the logistic DRS riddle, according to Ionut Georgescu.

“In time we need to impose several efficiency goals on ourselves.” Alice Nichita, started her intervention. “If we look back at the previous years, there has always been an extended producer responsibility which we have assumed, but there were some instruments which helped in achieving our goals. Each with its own utility. The DRS will serve a very specific market, that of the beverage producers, but will not solve all our problems and will only streamline one of the collection pillars. Indeed, policies, strategies, and regulations are always dictated by the authorities. We always tried to be a partner for the authorities and find efficient and feasible solutions together, in order to create a functional nation-wide system that will service all the stakeholders.” Says Nichita.

 

A retailer’s perspective

In Romania, around 7,000-10,000 retail units amount for nearly 35 percent of the national consumption. In these conditions, how do retailers view the Deposit Return System, as a burden or a facility? Emanuel Parvulescu, Head of Environment at Cora, tried to address this question. “It’s definitely an advantage for us, it’s a facility offered to our end-consumer. The system will become the biggest private investment in waste management in Romania. To become operational, the system needs to be able to efficiently collect large quantities of packaging waste from the consumers, and this will be beneficial to the entire chain: from citizens to producers, from retailers to authorities. Obviously, as retailers, we are essential partners in this endeavor, more so to our customers, but also to the producers and the authorities.” Says Parvulescu.

 

The legal challenges

A positive state involvement, in which citizens’ interests are taken into account, is of course the right way to go, but state interventionism in private business in a system in which responsibility belongs to private economic operators, who at the end of the day work under the pressure of efficiency and profit, so a clear and effective legal framework is one of the key elements. Authorities should clearly state the fundamental principles under which the DRS must operate, but those principles should be decided upon with the consultation of all stakeholders. “Apart from the challenges related to investments and logistics, the is also the legislative one. Each day we run into new obstacles that must be solved.” Says Cosmin Teodoru, the representative of the Romanian Ministry of Environment, Water and Forests. “Until now we talked about producers, logisticians, and retailers, but the most important player in this system is the citizen. The involvement of public authorities should be representative for the citizens and maintain a balance in this complicated system.”

 

Efficient technology and automation are key

“From our perspective, this is a complex process. There are lots of things that must be aligned for the system to work, whether we are talking about fiscal framework or logistics. As a producer, I believe that considering the specifics of our country it will be very complicated to achieve the proposed 65 percent collection rate. This is what we are trying to do with our waste collection reverse vending machines, which are automated and highly performant. In Brasov, for example, we are collecting nearly 1 million packages and citizens are getting used to it and understanding that it’s beneficial to everyone.” Says Bogdan Purcherea, Managing Director at Envipco Holding.

 

Watch the entire Panel 3 here:

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