The future of kraftliner shaped by Smurfit Kappa and Wagenborg
in conversation with...
Sture Öberg
Supply chain and Logistics Manager Smurfit Kappa
Can you tell something about Smurfit Kappa Kraftliner and her products?
For many decades Smurfit Kappa has been producing kraftliner in Piteå. Sture Öberg tells: “Smurfit Kappa Kraftliner Piteå is Europe’s biggest kraftliner producer with an annual output of about 700.000 tonnes. This equals a paper road, measuring 6,5 meters in width, from the arctic circle to Paris every day!” Kraftliner is a base paper mainly used for surface layers in high-quality corrugated cardboard packaging. Kraftliner is made entirely or largely from wood with long and strong fibers, explaining why the paper mill is situated in Piteå in the north of Sweden. “Being close to many trees is essential for our production process; so is the availability of reliable transport of our product”, explains Sture Öberg.
How do you transport you products to you customers?
“Smurfit Kappa Kraftliner has a big number of logistic suppliers to transport her products to her customers. Our nearest customer is located 800km ahead of the paper mill; the majority of our product is destined for the European continent. We use transport by rail and small volume on truck. However, two third of our total production is transported by sea, being the backbone of our logistic chain. And this is where Wagenborg comes in”, tells Sture Öberg.
"Two third of our total production is transported by sea, being the backbone of our logistic chain. And this is where Wagenborg comes in"
Sture Öberg - Logistics director Smurfit Kappa
Has Wagenborg always been your shipping supplier?
In the late eighties the shipping trade of Smurfit Kappa Kraftliner was executed by three vessels of Assi (Gorthon vessels) - and later on Sealink. However, after Sealink ceased to exist, Wagenborg took over the management of these old vessels. “After the Assi vessels were 30+ years old, we got a desire for new vessels at Smurfit Kappa” continues Sture Öberg. “In 2001, Wagenborg and Smurfit Kappa agreed on the new building of two dedicated ice-strengthened roll-on/roll-off carriers (Ro-Ro) to transport paper for Smurfit Kappa from Sweden to the UK, Germany and The Netherlands.” From 2004 on Wagenborg operates a liner service between the ports of Haraholmen (Piteå), Bremen, Sheerness, Terneuzen, Cuxhaven and Södertälje with the m.v. Bothniaborg and m.v. Balticborg.
Since transport is important to your supply chain, how do you select and evaluate your logistic suppliers?
“When we choose our logistic suppliers, we consider reputation as important”, states Sture Öberg. “Wagenborg has proven to be a trustful partner, not only to us, but also towards others. For the continuity of our business, sea transport always needs to work: 24 hours a day, 7 days a week and 365 days a year! Balticborg and Bothniaborg are always in time and thus have proven to be reliable vessels year-round in challenging circumstances.”
How is Wagenborg facing the challenges you are talking about?
“Due to our geographical location in the North of Sweden, severe weather conditions are common. Especially in winter time, when it is dark most of the day, severely snowing , -30 degrees and thick ice is covering the waters. This demands ice strengthened vessels and skillful crews. Captains have been working for Wagenborg for many years and know our trade extremely well. The combination of this quality crew and the reliable vessels were important ingredients for us to prologue the contract for another long period” tells Sture Öberg. Besides the quality crew and RORO carriers, Smurfit Kappa Kraftliner is also profiting from Wagenborgs flexible tonnage to match her increasing production output. Next to the liner service, LOLO shipments are carried out on a regular basis with 6.000 tonnes vessels.
"The combination of this quality crew and the reliable vessels were important ingredients for us to prologue the contract for another long period"
Sture Öberg - Logistics director Smurfit Kappa
Does that explain the match between Smurfit Kappa and Wagenborg?
Sture Öberg smiles: “I think Smurfit Kappa and Wagenborg are both companies with a long term horizon. We need this long term view in paper productions to remain stable in the future. I think Wagenborg’s efforts in Sweden indicate a long-term perspective and the willingness to grow together with us. Wagenborg has proven to have a long term vision by always treating us in a good way and solve problems; both the Dutch office and the Swedish office. Also the Smurfit Kappa management is deeply involved in this cooperation and convinced that Wagenborg is the right partner for us.”
What do you consider challenges for the future?
“Given the new sulphur regulation will be in force in 2020, it is not obvious what kind of fuels will be the standard” states Sture Öberg. “I am happy Wagenborg took the decision to install scrubber systems on both RORO vessels to secure the continuity of our trade. This way we will be able to keep on sailing on HFO and we will not be depending on a different kind of new bunker oil.” To conform to the sulphur standard, Wagenborg Shipping decided to equip the m.v. Bothniaborg and m.v. Balticborg with scrubbers in 2015.
What is the number 1 highlight in the cooperation between Smurfit Kappa and Wagenborg?
“Absolutely the moment when we signed the contract for the RORO vessels in August 2001!” states Sture Öberg without a doubt. “However, I consider the recent prolongation of the contract also a highlight.”
Can you tell us your considerations for extending the contract?
Sture Öberg explains: “As the old contract expired in 2019, we started a broad study of various alternatives to find the most suitable and sustainable sea system for our North Sea transports in the long term. A number of alternative solutions were studied with, among others, other ship operators. But the conclusion was that none of the alternatives studied yielded economic benefits and a change would entail major operational risks. The decision was to sign a new partnership contract with Wagenborg, which offers major cost benefits and scalability for our planned production increases. With the new contract, our cooperation with Wagenborg continues with ships that have a high environmental class and have proven to be very reliable over the years. The ice situation that we have during parts of the year places very high demands on both crew and ships. With this solution we have now assured ourselves of both high knowledge and quality.”
Over the last 10-15 years Smurfit Kappa and Wagenborg developed a North Sea vessel system that sets the backbone for the Smurfit Kappa Pitea logistics system. With the new contract and the continued partnership with Wagenborg, Smurfit Kappa assures scalability to adapt to future growth, based on a proved and sustainable vessel system.
Javier Rivas - Vice President Global Sourcing Smurfit Kappa
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