Business is slowly starting to pick up, and Waste Age wanted to check in with some commercial waste handlers to see how that’s affecting their operations and their vision of the near future. In this e-mail roundtable, executives at four commercial waste collection firms comment about how the economy is affecting waste volumes and to what degree customers are seeking more green services. Other topics discussed include comparing the commercial and residential markets, dealing with higher fuel costs, developing new markets and their firms’ most pressing challenges.
The Q&A participants include:
• Bobby Gregory, president and CEO of co-owner of Creedmoor, Texas-based Texas Disposal Systems;
• Tom Hill, CEO of Tulsa, Okla.-based American Waste Control Inc., Tulsa Recycle & Transfer Inc. and Sand Springs, Okla.-based American Environmental Landfill Inc.;
• Mary M. O’Brien, chief marketing officer for Jacksonville, Fla.-based Advanced Disposal; and
• Glenn Woods, president of New Orleans-based Metro Disposal Inc.
Waste Age (WA): What services are your commercial customers requesting now and how do they differ from what they were asking for five years ago?
Gregory: Large Fortune 500 companies, large school systems and event facilities are interested in a comprehensive waste reduction plan that includes composting services. All of these entities already have recycling programs in place and are looking to advance their diversion programs to the next level. Five years ago they were only interested in trash removal and corrugated recycling services. These customers are also asking for diversion education programs and reporting services to document their landfill diversion progress.
Hill: It is not just the services they are asking for, but the knowledge they have about our industry and those services. This new knowledge (Google it if you don’t know or YouTube a video to show you how) has changed the landscape of customer service along with how we present our services and associated prices. Everyone has become an expert. Recycling is the most requested service. Motives range from helping the environment to looking for ways to reduce the cost of waste services to their business. Price is still a driving factor in the economy; sadly, quality service has taken a back seat to pricing during this recent economic downturn.
O’Brien: We’ve seen increased demand for commingled and single-stream recycling, a change from dual sort recycling and an increased number of recyclables from commercial entities (used to be primarily cardboard and fiber materials). There’s also been demand for post-consumer container recycling, a change from just the business facility recycling (primarily cardboard in the past) to offering customers the opportunity to recycle (such as placing a recycling container at the consumer gas pump). There are requests for organics recycling and anaerobic digestion, something that was rarely requested in the past and only in experimental circumstances.
Finally, customers are asking for greater price per service reductions. All customers have wanted a fair price for quality service but the marketplace is extremely competitive now and customers are looking for every last dollar to squeeze out of their operations
Woods: The service request is basically the same now as it was five years ago, except the demand for recycling is starting to increase in the region.
WA: Many companies are adopting zero-waste goals or similarly aggressive landfill diversion efforts. To what extent are your commercial clients adopting green initiatives, and what services (organic waste diversion, hazardous waste recycling, e-waste collection, etc.) are you providing to help them reach their goals?
Gregory: We have set up full-scale single-stream recycling and food waste composting programs for a number of large school systems and large companies. We are helping them achieve these goals by offering online education programs for their students and employees, as well as online reporting of diversion efforts. We also provide individualized on-site hands-on training to employees at the launch of these efforts. These programs are in addition to our existing construction and demolition (C&D) waste recycling and scrap metal diversion operations. In the future, TDS plans to provide comprehensive e-waste collection and processing services.
Hill: We provide many of the services at both at our MRF and our landfill to aid in reducing the impact business waste has on the environment. We see some of the large companies (those willing to spend the money on education, new processes and higher overall waste costs) chasing the elusive “zero” landfill dream. Landfills play an important part of the waste stream. What better place to put those undesirables but in a controlled, renewable energy, Subtitle D landfill.
However, we also realize that for too many years, we as a society have been lazy and thrown valuable recyclables away as trash or burned them. Burning to recover energy is an option, but most people don’t realize the amount of ash as the byproduct going to a landfill. I’m not saying it’s wrong to move in a “zero” direction, but with today’s technology it seems hypocritical to claim your business has no environmental impact. The small business has too tight of a bottom line, while he is fighting for survival, to take on this extreme “zero” philosophy. We have had to adapt to the coming culture and we provide (at a cost) any level of “Reduce, Reuse, Recycle and Recover” our customers want.
O’Brien: There is a lot of talk around "zero waste" and everyone has their own definition of what this means. For some it is an overall revenue/expense neutral program, while for others the goal is truly zero waste to the landfill. Our challenge remains coaching the client on the local transaction nature of these services and the fact that what can be done in one market cannot necessarily be done in another. We base our services on customer needs and have increased our network of subcontractors to provide environmental services that we may not directly provide ourselves (such as electronics recycling and hazardous waste recycling).
Woods: A part of our mission is to be a good corporate citizen, protecting our region’s and our nation’s resources. As such, we are researching methods, strategizing, encouraging our customers and structuring our resources to become more deliberate about the landfill diversion efforts.
WA: To what degree are you seeing the improving economy reflected in the commercial waste volumes you are collecting?
Gregory: We are seeing a slow and steady uptick in generation of almost all types of commercial waste and recyclables. However, roll-off business has significantly lagged behind as the construction market has been very slow to recover and has not begun to approach the levels of 2008.
Hill: Being located in Tulsa, Okla., we did not experience the degree of bubble burst that many parts of the nation felt. Don’t get me wrong, we saw our share of small businesses close and felt the anguish of roll-off boxes sitting in the yard. Since that initial 2008 bottom we have seen a leveling and then a year-to-year increase. While the volumes are not back to the growth trend before 2008 we have volumes increasing in direct proportion to the economic growth. We are servicing more large-scale construction projects, which have a trickledown effect on all the trades.
O’Brien: We are not seeing a significant increase in volume. If they are there they are offset by increased recycling efforts or more efficient use of services. There has been a small increase in C&D volume.
Woods: Every year since the devastation and havoc inflicted by Hurricane Katrina, there has been a generous increase in volume. Previously established businesses are coming back on line as well as new businesses, as a result of the improving economy.
WA: If your firm also handles residential waste, have you noticed any divergence between the two markets? Conversely, have you seen any common trends?
Gregory: Residential services have mostly been converted from dual-stream to single-stream collection of recyclables, primarily due to cities, HOAs (Homeowners Associations), etc., initiating community-wide programs. Commercial generators are beginning to catch up in the conversion process as we aggressively market our commercial single-stream recycling service. Particularly in the Austin market and surrounding communities, businesses are becoming more open to new and innovative waste diversion opportunities. We have also converted some residential municipal contracts to three-cart systems to include bi-weekly collection of nonputrescible compostable materials.
Hill: We are commercial only.
O’Brien: We participate in both the commercial and residential solid waste/recycling business sectors. A common trend in both sectors in an increased push toward recycling efforts including the number of items that can be recycled, single-stream recycling, increased container storage of recyclables (carts vs. bins) and commitment (both financially and psychologically) to recycling, even in a down economy. Also, both sectors are very cost sensitive in this economy.
Woods: We provide residential service as well as commercial, and once again because of Hurricane Katrina there has been steady growth in both sectors for the last six years.
WA: How have spiking fuel costs affected your commercial operations and what are you doing to cope?
Gregory: Diesel fuel accounts for a large portion of operating costs for trucks and equipment. Continuous route adjustments, use of engine idle shutdown timers, proper tire specifications and daily air checks, driver awareness training and customer fuel surcharges are some of the strategies we use to minimize fuel costs. We are also considering CNG (compressed natural gas) as an option for some of our vehicles.
Hill: After 28 years of not having a fuel surcharge, we implemented one during the big fuel spike in 2008. We see a fuel surcharge as more of a fair pricing adjustment than a raise in rate pricing; which, once implemented with a fuel spike, is never adjusted downward when fuel prices drop. By implementing a fuel surcharge we have been able to maintain prices without a rate increase for over five years.
O’Brien: We participate in industry best practices and utilize a mix of operational and accounting practices to address volatile fuel costs. First and foremost, we are researching and investing in capital upgrades including CNG vehicles and fueling stations (we expect to have CNG operations in the Georgia marketplace by the end of the year), more fuel efficient engines, oils and lubricants, and management of our tires. (see below).
Advanced Disposal has reduced the amount of hydraulic oil used on our trucks by stretching the life of the oil by 200 percent. After discovering that we were tossing out oil that was still good only because it was scheduled by the calendar, we changed our policy. We now require analytical testing of all hydraulic oil, which gives us an exact reading of when the oil needs to be replaced.
Tire management is another area Advanced Disposal has targeted for reducing our carbon footprint. Tire Pressure Monitoring Technology uses an electronic pressure sensor that immediately alerts drivers when tire pressure dips below recommend levels. By keeping tire pressure at the correct levels, roll resistance is lessoned, resulting in increased fuel efficiency and economy.
Today Advanced Disposal has 240 collection vehicles that are 2008 or newer. These vehicles meet the Environmental Protection Agency (EPA) 2007 federal emission standards. All of these vehicles have engines equipped with diesel particulate filter (commonly known as DPF) technology. The DPF technology removes the soot or heavy particles from the engines’ exhaust. Today, 24 percent of our total fleet is considered EPA 2007 Certified Clean Diesel Engines, and we are constantly growing that percentage and quickly becoming a Clean Air Fleet.
EPA recently put into effect the 2010 Federal Emission Standard focused on removing the NOx from the exhaust gases. These two major EPA standards have essentially made the air coming out of vehicles’ exhaust systems cleaner than the air before it entered the engine.
Woods: We offset much of the impact of spiking fuel cost by employing advanced route optimization. Therefore, we are forced to pass only the absolute minimal cost alone to the customer.
WA: Which commercial sectors are more challenging to service and why? Which are the easiest?
Gregory: The most challenging are the accounts that are handled by third-party brokers. These brokers often do not know the local issues related to servicing the account, the volume of waste/recycling that the account actually produces, and are incentivized only on revenue generated to the broker. This often causes problems with the account that could be fixed with a direct communication between the service provider and the generator.
Hill: Maybe not the most challenging to service, but definitely the most challenging to maintain market share is roll-off as a business line. One guy, a truck and a couple of beat-up containers and they think they are a company (without all that pesky overhead, insurance, permits and government compliances). Add to this the instant credibility they can present on the Internet and he does become a competitor. The easiest may be permanent scheduled route service. Without route density (which is hard to get as a startup) you are just wearing out equipment running all over town to individual stops.
O’Brien: Retail and food service remain very cautious and cost conscious. The easiest to service are likely our office space customers which rely heavily on recycling and weekly dumpster usage.
Woods: I would have to say the restaurant and bar business is more of a challenge because the propensity for the contamination of the recyclables is higher. Department stores and the like are much easier to manage just because of their product.
WA: How are you working to establish new markets for commercial recyclables?
Gregory: In an effort to develop local markets for the recyclables we process, TDS is actively developing a 21D-acre eco industrial park surrounding our MRF. Secondary processing of recyclables and product manufacturing are some of the types businesses that will exist within the park. Also, low-value fiber recyclables and food waste are composted, and finished product is sold through our Garden-Ville stores. We are also working on the production of animal feed from select food waste products.
Hill: Having just invested $11 million in a new state-of-the-art MRF, this has become one of my focuses. Yes, we can continue to bring in new brokers (a must in this business), but I am trying to develop more end-users in my local area. Whether working with a local glass manufacturer or a startup Styrofoam company applying a patented process to allow it to be used as insulation in local construction, the key is use it at home and reduce transportation.
O’Brien: It is not as much a question of establishing new markets as it is understanding existing and expanding markets and trying to get them into areas where they are needed.
Woods: Presently we are limited by the parameters of our local processors, but we are constantly looking for viable alternatives for our clients.
WA: How do you address safety within your commercial operations?
Gregory: TDS is committed to a safe working environment. Our safety and human resource departments work closely together in screening applicants to ensure we hire only the best and safest candidates. Mandatory monthly safety training, safety bonuses and safety footwear allowances are some of the techniques we rely upon for creating a safe work environment Recently, we've started holding an annual truck driving competition or “road-e-o” as a fun way to emphasize safety at TDS.
Hill: I learned a long time ago we don’t do safety well in-house. We are busy and it gets pushed to the side. It isn’t important until someone gets hurt. I contract it out (they only get paid when they are doing safety…. so they stay on top of it) to an individual that has an insurance, safety and audit background. We get great monthly meetings, toolbox meetings and walk-around inspections. Every location has a customized monthly lesson plan built for the entire year to encompass seasonal topics. The contractor more than earns back his salary in efficiency savings, reduction of accidents and CSA2010 proactive measures.
O’Brien: The safety of our employees and customers is paramount in any and all of our operations – commercial, residential, recycling processing, transfer stations and landfills. All of our drivers undergo two weeks of classroom training before they even get behind the wheel (regardless of previous experience). Then the drivers have up to four weeks of behind-the-wheel training (depending on experience) before they are approved to operate independently. Every operational employee has this initial training and then averages up to 30 hours of annual training.
Woods: We approach safety in a very comprehensive manner, we strive to make safety a major part of the culture of our company and require every team member from the field operation to administrative and management to engage together in our safety program. Safety in our commercial operation is approached very similar to other areas of the company with specific focus on and consideration of traffic patterns and optimum service time in-route development to minimize vehicle and pedestrian traffic to the maximum extent possible.
WA: Beside fuel costs, what is the biggest threat to your commercial waste business right now? How are you working to confront it?
Gregory: The biggest threat to our commercial solid waste business, is now, as it always has been, the potential for municipalities to seize control of the open markets in which private solid waste companies operate; primarily through franchising open markets, establishment of special management districts and publicly subsidized direct competition with private operators. Burdened with budget deficits, and under the guise of zero waste, or similar environmental initiatives, cities, playing to the environmental sensibilities of the public, attempt to justify seizing control over the flows of solid waste and recyclables as well as the business rights of private operators, such as the rights to compete and set your own price, or determine how many trucks you can deploy, or what areas of town you can service.
To be clear, TDS supports zero waste as it concerns maximizing the diversion of solid waste and recyclables from landfill disposal; in fact, TDS has spent 35 years developing the facilities to make that possible. However, TDS opposes the use of zero waste as an excuse for cities to confiscate the business rights of responsible private operators in order to generate revenue for its own benefit.
Hill: Overweight loads. We currently do not have scales on all our fleet. While we attempt to qualify and quantify load composition (especially in our roll-off business line), it is almost impossible to not have loads that exceed bridge laws. We are working with our more permanent customers through education and container modifications. We are, over time, implementing scales and drop axels on the fleet (this can be expensive).
O’Brien: Today's litigious nature! Unfortunately, society seems to believe that suing any and every company is the answer to their personal financial needs.
Woods: Besides the cost of fuel, other challenges include recruiting and retaining drivers and technicians/mechanics that fit the culture of our company. We approach this challenge by aggressively pursuing candidates that fit the profile we're after through job fairs, relationships with trade school job placement personnel and by encouraging recruitment by current members of our team.