Should You Compete for Commercial Accounts?

Municipal solid waste managers who are considering competing against private haulers for commercial customers should research the viability of such a venture before stepping up to the plate.

Commercial collection's operational challenges are what makes these accounts more profitable than residential accounts. Indeed, private haulers that provide residential service in an exclusive franchise often do so in order to capture the more lucrative commercial business - business that, in turn, subsidizes residential rates.

Although residential collection brings in less money, operationally, it is a cinch when compared to commercial collections. For starters, residential service levels and expenses are uniform. Collection becomes just an invariable mathematical formula as long as haulers know the number of residential accounts, the set-out rates for refuse, recyclables and green wastes, and the projected weights.

Haulers even can project the seasonal fluctuations of green waste volumes and adjust their procedures accordingly.

Conversely, commercial accounts keep haulers on their toes. For example, the customer base varies - from small, mom-and-pop grocery stores to industrial complexes and mega-malls - and the waste generated can range from 32-gallon, manual collection bins to 40-cubic-yard compactors.

Service frequency for commercial accounts can become a nightmare as well. For example, while one account might need a pick-up only once per week, a neighboring account might require waste services seven days per week.

Or, today, a hauler's commercial trucks might return to the yard early, but tomorrow, each account's bin might be overfilled, requiring more trips to the landfill and hours of overtime.

Overall, commercial collection can be a tough business to gauge, but it could be a worthwhile prospect for municipal haulers that understand the challenges.