You’re overpaying on your waste and recycling expenses by 10-3%, just like most companies nationwide.
Here are the five ways you’re overpaying:
- Your contract allows price spikes.
- Your service levels and equipment are inefficient.
- You don’t know market rates for waste and recycling services.
- You’re paying ancillary invoice fees.
-Your contract automatically renews.
Doing any one of these things will result in overspending. Doing all of them guarantees it!
In this blog, I’ll walk you through the basics of each topic and show you how these problems are leading to overspending on waste expenses in your location portfolio. Ready? Let's dive in!
Problem #1: You’re overpaying because your contract allows price hikes.
Let’s talk about what price spikes are, how they affect your bills, and how to tell whether your contract limits them.
What are price hikes? Haulers count on raising profits by consistently increasing or hiking up the rates of service.
Most haulers will not enter an agreement unless they are making at least a 15% profit, and their profit margins will almost always increase every year. (Some haulers make as much as 100% or more in profit!)
We’ve seen haulers raise prices as much as four times a year at a 5-10% increase. These incremental increases add up.
Say you’ve employed a hauler for four years. You started paying them $1,000 a month. Four years later, you could be paying as much $1,500 a month or more!
That’s a 50% increase - at just one property. Think about how much you’ll be paying a year from now, or two, or ten.
Ask your accounting team to log on to your hauler portal and review the invoices from the past year. Are there noticeable increases?
If you don't have a copy of your waste hauler contract, ask your hauler to send you a copy.
Your waste equipment comprises every waste and recycling receptacle serviced by your hauler. These include:
- Compactors
- Front Load Dumpsters
- Open Top Dumpsters
- Balers
- Toters
The efficiency of your waste equipment has a direct impact on your waste spend. If you don’t have the equipment you truly need, or if you have too much equipment, you’ll overpay.
You’ll also overpay if your service levels are incorrect. “Service levels” indicate how often trash and recycling is picked up at your locations.
About 70% of the clients we’ve worked with in the past 18 years have been serviced too frequently!
Are you one of them?
Problem #2: How Your Service Levels are Ineffective
Your hauler is paid to pick up your trash, not to find cost-cutting waste solutions.
As a result, in the 18 years we’ve been in business we’ve seen inaccurate service levels occur in almost every state - regardless of which waste vendor was employed.
What exactly do we mean by inaccurate service levels? We mean that your real waste disposal needs have no correlation with what you’re paying for.
You may be paying for 5 pick-ups a week when you only actually need 2. Or, alternatively, your dumpsters are too big.
How would we know the difference? Let’s walk through an example that shows the level of detail we frequently use to maximize savings.
Suppose you have a location in Raleigh, NC with two-6 yard dumpsters that is serviced three times a week by Waste Management.
We would find out:
How full those containers are when serviced
The equipment history for the site
Pricing options for larger dumpsters
Pricing options for less frequent service
Whether the materials in these containers can be recycled
Whether the hauler frequently misses pick ups
If there is a history of overage fees
These questions would give us the full picture of your current waste process. Let’s assume we find that your dumpsters are only about half full when serviced, and that it’s more cost-effective to pay for larger dumpsters that get serviced fewer times per week. A typical client in this scenario could save as much $3000 over the lifetime of their waste hauler contract.
Problem # 3: You don’t know market waste rates.
Let's look at the third way you may be overspending: you don’t know market rates for waste and recycling services.
We’ll go behind the scenes of the waste hauler industry and show you how haulers can take advantage of what you don’t know.
Let’s talk about what market rates are, why knowing them creates accountability, and how that accountability results in savings.
Market rates means the going rate of waste and recycling services in your area. We wish there were uniform rates throughout the country, but this just isn’t the case. A “good” rate in Virginia may be an astronomically “bad” rate in Idaho.
Your average market rates are dependent on three aspects:
The number of haulers in your area.
Your geographic location.
Consumer tolerance for price hikes.
Your market rates can also be affected by other factors like fuel and equipment prices.
Keep in mind that market rates are average rates, but not the required rate. We find most of our savings for clients through capping price spikes, eliminating ancillary fees, and implementing ideal service levels. The “market rate” can almost always be improved by an independent auditor. We know how to work within industry constraints to find every savings opportunity available to you!
We just worked with a client in Roanoke, Virginia that was charged almost $235 a month for one 8-yard dumpster by Republic Services. We found another area hauler that charged $120 a month for the same service - which amounted to a $4140 in savings over the 3-year term of that contract. And that was just at one site!
Problem #4: You’re paying ancillary invoice fees
Your hauler would rather keep you in the dark about negotiable fees.
With our assistance, the majority of our clients pay a reduced fuel fee and administrative fee on their contract. If your contract prohibits fees, you don’t have to pay them.
Here are two of the most common fees.
Container Service Plan: This is a fee that was automatically added to most Waste Management accounts a few years ago. Enrollment in this plan allows you to replace your container at will.
Fuel/environmental fee: Almost everyone gets this charge on their invoice.
Basically, the hauler is charging you for the gas it takes to get to your site and deliver your trash to the dump. But here’s the thing - they charge everyone on their route a fuel fee.
They are more than recouping the cost of gas. And with no limits in place on your agreement, your fuel and environment fees are likely to skyrocket at will.
If you have a bad contract, you’ll pay these fees in addition to your price spikes, overages, and extra trip fees - for every location in your portfolio. These little fees add up fast. This is why our clients rarely pay the entirety of these fees. We close all the loopholes in our clients contract that allow haulers to charge these fees.
Problem #5: Your contract auto- renews
We don’t want you to be like most companies nationwide who are massively overpaying on their waste and recycling expenses. In this section, we’ll look at what an auto-renewal term clause is, where you can find it in your contract, and why it’s important to eradicate it.
Most haulers are betting on the fact that you’re not going to remember when your contract expires - typically three or five years from the day you sign it.
They know that if you are aware of this date you may choose to go with a different hauler or change your contract. So most contracts have what is called an automatic renewal clause. It means that unless someone intervenes, your contract will automatically renew without notice and without your input.
Waste needs often change over time, and waste service levels may need adjusting. When we cancel the auto-renewal clauses for our clients, it allows us the opportunity to find better pricing with another hauler or to renegotiate new contracts with your current hauler.
Both options can contribute to thousands of dollars in savings over time.
If there was a possibility that a 15 minute phone call could save you over $100,000 each year, would you make time for it?
Anita Huffman, the Corporate Finance Director at TWE Smart Nonwoven Solutions, did. As a result, her company will save $300,000 in the next three years! How much could you save?
