If you don’t think the business of hauling municipal solid waste (MSW) long distances is a vibrant and growing segment of the refuse industry, just ask New York City-based Evercore Capital Partners (ECP), the private equity investing arm of Evercore Partners, a $376 million “boutique” financial advisory and Wall Street investment firm. ECP was so bullish on the long-haul waste market that five years ago it paid an undisclosed sum for a majority stake in Chicago-based Mr. Bult’s Inc. (MBI), one of the largest providers of long-haul solid waste transportation services in the United States.
“We were attracted to MBI because of its leading position in a growing and fragmented [market] sector characterized by a number of promising trends,” noted Neeraj Mital, senior managing director of Evercore at the time.
Mital says those promising trends include steady growth in solid waste generation; the shift in disposal to fewer, larger landfills in more remote, rural areas; the need to transport solid waste over increasingly greater distances; the expectation that trucking will remain the preferred method of long-haul transportation; and the growing propensity for waste companies and municipalities to outsource their long-haul equipment and transportation services to carriers like MBI.
The New Landfill Landscape
This migration to long-haul refuse transportation isn’t a new trend by any means, but it’s one that’s been picking up speed in recent years, according to a recent paper written by Molly Macauley, senior fellow and director of academic programs for the Washington-based think tank Resources for the Future (RFF).
“For centuries, households and businesses in the [United States] disposed of their waste at the local town dump,” she explained. “But starting in the 1990s, stricter government regulation to protect human health and the environment led to major changes in the scale and scope of waste-handling technologies.”
The reduction in landfills is perhaps the most dramatic result of that regulatory shift, which in turn has fostered the growing need for long-haul refuse transport services.
Macauley noted, for example, that the number of landfills operating in the United States declined from nearly 8,000 in 1988 to some 1,750 by 2006. In turn, technological changes in waste management led to a new market structure and industrial organization of waste management services on a national and regional, rather than local, basis, she added.
“Two of the most pronounced differences in handling waste today are that it is now typically hauled long distances and disposal takes place at large, regional facilities,” she pointed out. “The ‘town dump’ has been replaced by an industry operating coast-to-coast and at a much larger technological and financial scale.”
Other disposal methods have became more common as well, such as incineration and the increased diversion of recyclable materials like aluminum cans, plastic and glass bottles, and newspapers. This supports the design and construction of wholly new intermediate facilities like transfer stations, material recovery facilities (MRFs) and waste-to-energy (WTE) facilities – all of which require a transportation component, Macauley stressed.
“At transfer stations, for example, waste is aggregated from neighborhood collection routes into larger trucks for long-haul shipping,” she noted.
“In response to state requirements for local waste management plans, many jurisdictions implemented recycling programs, leading to the construction of new materials recovery facilities (MRFs), at which some recyclable materials were removed from the waste stream before final disposal,” Macauley added. “These changes also led to an increase in long-distance hauling and even interstate shipments of waste by truck, rail and barge companies.”
Trash Trucking Tricks
One trucking firm that has benefitted from the demand for long-haul waste transport services is Community Recycling and Resource Recovery, a 51-year-old company located in California’s San Fernando Valley. Community operates some 200 trucks, which include residential collection vehicles, roll-offs, etc. The firm operates 45 front-loaders alone to handle street-side garbage pickup in the San Fernando Valley, as well as west Los Angeles.
But today, owner Tom Fry says the company’s bread and butter is the roll-off business and long-haul transportation of refuse and recyclable materials using primarily Kenworth-brand T800 tractors pulling 45-foot-long company-built trailers throughout the southern California region.
Winning one 10-year contract with the South Bay Waste Management Authority in Redwood, Calif., alone necessitated the acquisition of 22 new tractors, he notes.
Fry explains that his company’s tractor-trailers travel a variety of distances hauling trash. Some travel just 16 miles to the still-operating county landfill. Others haul recycled materials and so-called green waste up to 75 miles one-way to various locations throughout the region.
“One key to our efficiency is hauling more refuse and recyclables on each trip and operating trucks with great dependability,” he points out. “We also have time slots for when we have pick-ups at the center that must be met.”
As a result, Fry tries to spec tractors in long-haul trash service to be as light as possible so they can maximize payload and thus profitability. “On the lightweight side, the T800s that we spec’d to pull the tippers [dump trailers] came in at 14,900 pounds GVW (gross vehicle weight), with the others coming at 15,200 pounds.”
To shave weight and compensate for the addition of emission control systems, Community’s tractors come equipped with smaller block 13-liter engines compared to their beefier 15-liter brethren, which saves about 400 pounds. Other lightweight components and their respective weight savings include aluminum frame rails (300 lbs.), composite front springs (165 lbs.), Kenworth’s AG380 suspension (370 lbs.), aluminum fifth wheel and angles (340 lbs.) and Meritor’s X-30 brake drums (120 lbs.)
Leaving the Station
Railroad transportation of trash – more commonly referred to as waste by rail services or WBR for short – has also increased in recent years, in particular to address specialized waste concerns that can’t be addressed by the refuse handling facilities in a given location.
Houston-based Waste Management (WM) used its own WBR division, established in 2000, to solve a ticklish trash problem faced several years ago by Oak Environmental Services of Birmingham, Ala., during the decommissioning of a 30-year-old Georgia smelting plant once used to produce copper wire.
That decommissioning project generated, among other things, some 3,000 tons of “process waste,” which included bagged house dust from the plant’s air pollution control devices and other debris. An analysis of that waste showed it contained significant amounts of heavy metals including lead, cadmium and copper, along with low levels of toxic organic contaminates (known as UHCs).
A white paper on waste-by-rail strategies on Waste Management’s website notes that although metals normally can be stabilized so that they can be safely placed in Subtitle “C” landfills, UHCs need to be incinerated. In this case, the metals those UHCs were mixed with could only be incinerated in extremely fine amounts — so fine that it would have taken six full years to dispose of that amount of waste.
Furthermore, no landfill or treatment plant existed in the Georgia area capable of handling the UHCs mixed in the project’s waste stream, WM says in the paper. In the end, WM tapped its WBR service and used trains to transport all of the specialized waste 3,000 miles across the country to Oregon, to one of its certified hazardous materials disposal locations.
“Instead of taking six years to process, those wastes were eventually transported, treated and placed in a landfill in less than a month,” says WM in its white paper.
The “Multi-Modal” Strategy
Going forward, many municipalities are being encouraged to take a “multi-modal” approach to handling long-haul waste, using barges, trains and trucks in combination to satisfy their transportation needs.
Two consulting firms, Englewood, Colo.-based CH2M Hill and Phoenix-based WIH Resource Group, published a research paper that found one of the most effective ways to ensure competition among transportation modes to haul waste material is to secure or make available the necessary facilities and infrastructure needed for each of the modes to compete against each other.
“Having control of a terminal that can serve multiple transport modes and send waste to multiple landfills would help maintain competition for both transportation and disposal,” the firms noted in the paper.
One example they cited of this type of strategy is New York City, which is building four marine waste transfer station terminals owned by the city, but with operations and marine transportation to be subcontracted to private companies.
Another example is the Sanitation Districts of Los Angeles County (LACSD), which is developing a WBR program that will interconnect with long-haul trucks, known as intermodal service. LACSD is securing land adjacent to its Puente Hills MRF to design and build an intermodal ramp for handling rail cars and “transloading” (the process whereby steel containers are transferred from trucks to trains and vice versa) intermodal truck containers packed with solid waste.
LACSD expects its intermodal operation to be up and running by 2012 and that it will handle some of the 4,400 tons of refuse processed by the Puente Hills facility each day. Once loaded, trains would leave the Puente Hills MRF and travel 200 miles east from Los Angeles to Mesquite Regional Landfill in El Centro, Calif., along rail lines operated by Union Pacific.
Another component of the multi-modal transport strategy is for municipalities to purchase transfer trailers (if trucking is the main mode of transport) and/or the intermodal containers (if rail or barge transport is the dominant mode), CH2M and WIH noted. “As trailers and containers are expensive depreciable items, removing this cost element from the procurement process will make it easier for some smaller, local firms that are less capitalized to compete for the business,” they explained.
“It would also have the advantage of lowering total costs, because the private sector would not receive a profit margin on such equipment,” the firms added. “Further, should a provider go out of business for some reason, it would be more feasible for a municipality to simply hire another transportation company (with drivers and tractors) for emergency service than having to completely rebid solid waste transportation services.”
The strategy here, CH2M and WIH said, it to “level the playing field” among competing modes, allowing all players the means to secure new equipment and participate in the procurement process, while providing lower cost capital that ends up lowering a municipality’s total cost of transportation services.
One thing is for certain: the market for long haul waste transportation is still in its infancy, even though the circumstances driving the need for such services have been brewing for well over a decade.
“A decrease in the number and availability of waste disposal sites, all while an increase in material requiring disposal occurred, has caused a major shift in waste markets and the industry itself,” noted Chris Campman, manager of solid waste for Camp Hill, Pa.-based refuse transportation provider Gannett Fleming, Inc., more than 10 years ago in a speech at the Federation of New York Solid Waste Associations annual meeting. “As the nation continues to increase the amount of solid waste generated for disposal, private companies internalize disposal options, the number of transfer stations increases, and long haul transportation options expand.”
Added Campman at the time: “Also, as state and local governments continue to implement additional controls on solid waste facilities, potential volume issues loom on the horizon. This causes an imbalance in disposal sites, which tends to complicate the matter.”
Thus it appears long-haul transportation solutions to these ever-growing waste disposal issues still have a long road yet to travel.
Sean Kilcarr is a senior editor for Fleet Owner, a sister publication of Waste Age.