7 Ways You're Making Your Hauler Rich - Part 1
90% of companies in the US are making their haulers rich. Below, we’ll discuss the top three ways you’re likely doing this. There are 7 specific ways companies inadvertently overpay, and we’ll show you how to stop below.
Too many companies are overpaying - you don’t have to be one of them.
You’re making your waste hauler rich by not:
Knowing about waste hauler problems
Eliminating waste or garbage vendor invoice fees
Eradicating the auto-renewal clause
Eliminating price hikes
We’ll cover these four in this article, and the last three in part 2.
In the 17 years we’ve been in business, these are the issues we routinely fix for our client. Let’s take a look at these common waste disposal problems - and their solutions. We’ll take a deep dive into each one so you can start saving!
You don’t know about your hidden waste problems
The waste industry has created a norm where most companies are overpaying and are completely in the dark about it. A lot of professionals think that it’s normal to have price spikes, or it’s normal to have to pay all kinds of fees, for example. But it doesn’t have to be - our clients certainly don’t!
Your waste hauler is betting that you’re going to be kept in the dark about what’s really going on in your waste management. He’s betting that you aren’t going to have the time or resources to really find and address your waste disposal problems. What you don’t know is likely costing you, so it’s worth it to take some time to ensure your waste management processes are really as efficient as they could be.
You have waste or garbage vendor invoice fees
Many of our clients have assumed that they simply have to pay the fees their hauler asks them to pay. But we’ve found that many haulers are willing to eradicate or significantly reduce the fees they charge companies! Not many people really know what these waste fees are - let’s take a look at some of the most common ones below.
Container Service Plan: This is a fee that was automatically added to most Waste Management Accounts a few years ago. Enrollment in this plan (involuntary though it may be) allows you to replace your container as necessary. But most people don’t need to replace their garbage container frequently - some of our customers have containers that over 5 years old and still look fine.
So do you really need to pay for this plan? Probably not.
Fuel/environmental fee: The hauler charges you for the gas to service your site and deliver your trash to the dump. But they typically more than recoup this since they charge everyone on the route for gas. When this occurs, the fee simply becomes an additional profit center.
Recycling recovery fee: This fee is charged by the hauler to transfer your recyclable material from your site to the drop off site. The discerning reader may ask: “Wait! Aren’t they already charging me a for fuel? Shouldn’t this fee ?” This charge often isn’t actually covering anything - it’s just another fee that the haulers often tack on because they can.
Regulatory Cost recovery fee: Some haulers, (like Waste Management) will charge this fee to cover costs in other regions - not necessarily yours. Your fees go towards paying other people’s garbage disposal. You can see an example of this fee in the picture below.
Do any of these fees look familiar? One or more of the ones above are probably occurring on your invoices currently. If you notice that some of them seem high, or that you have multiple properties it’s a good idea to take a look at your contract specifics.
See if they have any language about “all inclusive” waste rates that include reduced fees, or if they eliminate them completely. Any reduction in recurring charges will reduce your overall waste expenses.
You have an auto-renewal clause on your waste contract
You’re making your hauler rich by not eliminating your auto-renewal clause.
Most haulers are betting on the fact that you’re not going to remember when your contract expires three or five years from now. They know that if you do, you may choose to go with a different hauler, or start changing your contract. So they, in effect, limit the possibility of that happening.
Your contract will likely automatically renew without your input. So we’ve seen a lot of our customers get stuck with a service that may or may not be ideal.
The language often looks like this:
Allowing your contract to auto-renew wouldn’t necessarily be a bad thing - except it doesn’t allow you a chance to review what is really best for your company.
Waste needs often change over time, and waste service levels may need adjusting. Cancelling your auto-renewal clause gives you the time you need to find better pricing or to renegotiate new contracts, both of which contributes to thousands of dollars in savings over time.
Because contracts inherently have terms, any savings that are enacted accumulate over time. Suppose you stop your auto renewal and are able to find $1000 in savings each month by renegotiating your contract with better rates and no price spikes. Over the five year life of your contract, you’ll save over $60,000. That’s not pocket change!
And it’s savings that are made possible by stopping contract auto-renewal. You deserve the chance to get the best rates you can on your waste disposal - and for your waste management process.
Not eliminating price hikes in your waste management
You’re making your hauler rich by not eradicating or limiting price spikes on your contract. Most trash haulers schedule regular price hikes and service charge increases. This is a massive waste disposal problem!
Your hauler knows that he will raise prices at least once a year. Don’t let them get away with that.
We’ve seen haulers raise prices as much as four times a year at a 5-10% increase.
If price spikes happen at least one a year, think about how much you’ll be paying a year from now, or two, or ten. Again eradicating the possibility for price spikes now means you’ll be saving more later.
Not sure if your contract limits them? Pull out your contract and let’s have a look!
Look in the Payment Terms of your Waste Hauler contract. It’s typically titled something like “Charges, Payments, Adjustments.” If you do not find language that limits or prohibits spikes, you need to re-evaluate your contract ASAP. Because what this means is that a hauler could increase your rates at will - and you would have very little recourse.
In effect most price spikes make you pay higher and higher rates for the exact same services.
Now don’t get me wrong - some price spikes are actually legitimate. As fuel prices increase, the cost of providing services increases. But most haulers are not raising prices because the cost of service is increasing. They’re raising them because they can.
How do we know? Because we know how haulers calculate their costs. And we know the legitimate costs from the shady ones.
It costs a lot to run a waste disposal business. Here are some of the costs they incur to provide you service.
Disposal cost to drop off waste materials at disposal facility. Waste disposal facilities charge for the garbage they receive? Haulers have to pay this fee, and this fee often gets passed onto you - and not always in part.
Cost of hauler equipment. Dumpsters, garbage trucks, and compactors are expensive to make and they can be extremely expensive to service. The trash business isn’t exactly gentle on equipment. Dumpsters lose tops, or get rusted out. Compactors inexplicably stop working. Since most companies rent the dumpsters or compactores from the hauler company, the haulers have to buy the equipment and service it.
Cost for servicing account. It’s expensive for haulers to drive their trucks to and from your locations. Haulers have to take into account employee compensation, the fuel charges, and the cost of maintaining the trucks. Haulers will typically divide up the number of locations they have to service to figure out how much to charge each customer. This means you aren’t necessarily charged exactly what it takes to get from your location to another; it’s presumably divided up equally among those who are on the same route. However, it has to be said, there’s no external oversight on this. Most companies trust that their haulers are accurately and fairly charging them. But we’ve found that haulers can widely vary on how much of legitimate charges are passed on to the client - and how much is added in on top of that. Haulers should make a profit doing what they do - it’s important work! But they don’t need to overcharge simply because they can.
And a lot of times, they do. How do we know this? Because we’ve worked inside the waste industry before. Most haulers will not enter an agreement unless they are making at least a 15% profit. (We’ve actually seen some companies make as much as 100% or more in profit!)
Profit margins for the haulers almost always increase every year. We’re talking 99% of the time - and the main reason for this is price spikes. When these price spikes happen, the majority of businesses either don’t notice them or don’t question them. Haulers often bet that you won’t notice, or that you won’t care if you do.