It All Adds Up
Waste and recycling is not one of those expense categories that usually ranks at the top of the list. Like most businesses or organizations you have plenty to worry about so keeping a lid on waste and recycling costs is not a priority.
If you look at what you spend each month you might be surprised to see that it can add up to substantial costs.
The waste and recycling industry in the U.S. alone is over $100 billion dollars. In our experience clients are overspending on average by 30-40%.
Your waste and recycling expenses deserve an extra look. Below we’ve outlined just five of the ways you might be overspending on your waste and recycling bills.
1. Overage fees and extra ‘yards’
Overage fees and extra yards are charged when a customer has extra trash overflowing from the dumpster or on the ground. Since the waste industry measures off of ‘volume,’ the extra ‘yard’ implies an extra cubic yard of trash on the ground (or overflowing from the dumpster). Overage fees and extra yardage are used interchangeably amongst many vendors.
In the past few years waste haulers have begun charging overage fees and extra yards at an alarming rate. These charges often show up on invoices with zero documentation supporting them. The charges can range from $10-$250 as well (plus taxes and fees).
The logic behind why the haulers charge them is not unfounded. No one wants trash on the ground or spilling out of dumpsters. In application though it has turned into a charge that is frequently abused or results in erroneous charges.
There are a couple obvious ways to combat this. One is to make sure your employees keep the lids shut, so the trash does not go above a certain level in the dumpster (many haulers will penalize you now if the level of trash prevents the lids from shutting). The other is to make sure you are on the right service level and pick-up frequency so you do not run into overflow issues.
Even with these two things correct we see time and time again clients getting hit with large overage charges that are either not valid, or not charged at the correct rate, or overages that were a result of a missed pick up by the hauler (i.e. not the client’s fault). There have even been times overage charges have appeared on client invoices, where once investigated, were determined to be completely unrelated to the location in question and should have been applied to another customer in a different part of the country!
These errors and overcharges are not intentional but they occur frequently. Keeping a close eye on these charges will help ensure you get what you are paying for and your bottom line stays healthy.
2. Contract applied incorrectly
Almost every client in an open market for waste is under a contract with their vendor. These contracts often range from three-five years. The contracts are in place to specify the charges, and how they are supposed to be charged. Often in the waste and recycling industry these agreements are interpreted incorrectly.
Loosely interpreted fine print can lead to ambiguous charges and fees down the road. Furthermore, simple errors can multiply as price increases on top of price increases compound.
It’s incredibly important to make sure the contracts are being applied and adhered to correctly to keep your costs as low as possible.
3. Fees and surcharges
There are countless fees and surcharges that apply to your waste and recycling costs. From vendor fees and surcharges to government franchisee fees and regulatory charges, the list is very long. Additionally, they can factor in as much as 50% of the overall costs that have been incurred. Below are just a few of the charges our clients often face:
- Fuel fee
- Environmental fee
- Regulatory cost recovery charge
- Container maintenance fee
- Overage fees
- Extra yardage charges
- Franchise fees
- Removal charges
- Exchange fees
- Delivery fees
- Liner charges
- Contamination fees
- Recyclable material offset charge
- Lock charges
Knowing which of these fees are valid, and which of these are reasonable as well, is a big factor in managing this expense area.
4. Different equipment needs
Depending upon your organization you may have some widely varying equipment needs.
With dumpsters there are quite a few combinations – rear load, front load, 2, 4, 6, 8, or 10 cubic yards, apartment style, slant top, and side load dumpsters are all types you can choose from depending upon your needs.
There are also roll-off dumpster and compactors. These are generally used for higher volume use cases and the expenses range wildly. You can find roll offs generally ranging between 10, 20, 30, and 40 cubic yards.
Compactors are generally 2 or 4 cubic yards and can be attached to various size ‘receiver boxes’ where the compacted trash is deposited.
Compactors are also generally found in two varieties; self contained and stationary.
All of the above, and their associated rental, lease fees and use cases can play a big factor in your overall expenses.
Just one example to illustrate this occurred with a client of ours. We discovered during the audit that their compactor was not working properly. The hydraulic ram was not compacting at the pressure specified by the manufacturer. As a result, the compactor was indicating it was full when it was not. This resulted in this client paying 2x as much as they should have. Unfortunately we were not able to recoup the lost money for the years the equipment had been operating inefficiently, but we were able to save them over $20,000/year by fixing this issue.
5. Recycling programs
To recycle or not to recycle? That is a question many of our clients debate. In todays market, recycling programs can be very expensive if not implemented correctly, and many businesses abandon even trying as a result. We’ve helped thousands of client locations across the country begin or improve their recycling programs, and save money in the process.
The recycling market is constantly changing though. As you may have heard a large source of recyclable materials is China. They have drastically changed what they will and will not accept in recent years.
This has had a profound effect on recycle programs across the country and commodity prices on recyclables have fluctuated drastically as a result.
These changes have also resulted in many vendors charging incredible ‘contamination fees.’ As with some of the fees mentioned earlier, the logic for this is sound. No one wants trash mixed in the recyclables, aka contamination. The amount and frequency of these charges, as well as documentation can be a grey and costly area though for people who have recycle programs.
Unfortunately this change in the market has resulted in the ‘baby being thrown out with the bathwater.’ Many people have abandoned their recycle programs all together.
There are still plenty of ways to set up recycling programs that are both good for the planet and good for your wallet. It just requires a lot more care, attention, and guidance.
We hope you’ve learned some helpful tips and areas that need to be focused on. The above are just 5 of the 14 things we look for when conducting a waste and recycling cost reduction audit. If you would like professional help, on a risk-free shared savings basis, we’d love to help. Simply call us at 1-877-843-7579 or email us at email@example.com.