In the past few months, it seems like everywhere we turn things are more expensive. We’re paying more for food in smaller containers. We’re shelling out more to pay for gasoline, diesel fuel, and electricity. We’re also paying more for waste services.
Many of these increasing costs can be tied back to inflation. It’s the latest wrench thrown into the arena for businesses to deal with. For many, the last three years have been a barrage of trying to remain afloat, keeping customers and employees healthy, and working to balance passing costs off to consumers while trying to earn a profit.
Customers are now seeing their bills go up due to annual price increases in the waste sector. Landfill tipping fees are increasing and the cost to run recycling programs has many questioning whether it’s worth it to continue. We’re breaking down how this inflation mess all came about and we’ll take a deeper look into the effects on the waste industry.
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What is inflation?
Inflation can be defined as the general increase in the price of goods and services and the general decrease in purchasing power. For example, you might only be able to buy two tires for $100 now instead of a set of four several years ago. This loss of purchasing power means the public’s ability to buy things like food, housing, transportation, and utilities is greatly reduced, often leading to an economic slowdown.
Believe it or not, too much and too little inflation are both considered harmful to an economy. The current situation in the U.S., in which inflation rose to the highest levels since the 1980s, can be linked to a number of factors:
• The COVID-19 pandemic led to lockdowns, industry slowdowns, factory closures, and global supply chain disruptions
• The government issued stimulus checks to help people while also increasing unemployment benefits
• The economy quickly bounced back as millions of people took advantage of vaccines causing increased demand, fueled in part by stimulus money, to skyrocket. Demand quickly overtook supply.
• Russia launched an attack on a foreign nation, Ukraine, which led to economic sanctions and worldwide limits on Russian fossil fuel imports. This dramatically impacted the oil markets, causing prices to skyrocket.
This perfect storm of factors created the current situation we’re dealing with in the U.S. It’s part of the reason we’re seeing major ripples in the waste industry.
What does inflation mean for the waste industry?
The cost to run waste and recycling programs is going up. As a result, companies are passing off these increased costs to the consumer in a variety of ways.
Tipping fees increasing
Landfill tipping fees are one area where RoadRunner is seeing an increase in price. Tipping fees are the cost per ton to dispose of trash in a landfill. U.S. landfills in places like Springfield, Missouri; Grand Junction, Colorado; and near Grover Beach, California all raised fees this year. And those are hardly the only places doing so. Last year, one report found fees had already increased by as much as two dollars a ton in some areas of the country.
Tipping fee increases can be a double-edged sword, however. On the one hand, customers are paying more because disposal companies are paying more. On the other, those fees are sometimes used to help offset the costs of recycling programs in some areas. Several states use tipping fees to help fund recycling programs.
Fees are also going up or are being added at Material Recovery Facilities where recyclables are sorted and bundled.
New surcharges, annual increases, labor problems
New surcharges, oftentimes for fuel, are now being added to waste bills. As of mid-July, diesel prices were still near $6 a gallon on average across the U.S. Several companies tie the dollar amount to a fuel surcharge customers face with fluctuations in the average price of fuel. The more fuel costs a company, the more customers will be paying.
Customers are seeing annual price increases also take effect. Multiple waste company executives said at a conference in early 2022 they had success in maintaining a profit while increasing prices. Like other industries, waste companies are having a hard time recruiting and keeping talented employees. Those costs are also passed on to the consumer as the industry looks to combat service delays and employee burnout.
The rise in prices for recyclables
There’s growing demand from big brand names for recycled material to include in their products. With the pandemic accelerating interest in sustainable corporate goals, companies like Patagonia, Ikea, Proctor & Gamble, and Apple have announced pledges to use more recycled material. Lingering supply chain problems and shortages of truck drivers have companies looking to purchase nearby bales of plastic instead of waiting to get virgin material. Skyrocketing oil prices are also factoring in along with sharply rising ocean freight prices. All of this caused prices for recycled materials to soar. PET, the type of plastic used in bottles, was forecast in April 2022 at $2,300 per metric ton, more than a dollar a pound. Last year, recycled PET was going for as much as 20 cents more per pound than virgin material. The price for HDPE, plastic material that is used in milk jugs, for example, was more than 89 cents per pound last year.
With the demand for recycled material up, it’s good for recycling programs. There’s a demonstrated need for recyclable materials. Recycling programs and businesses that utilize them are able to see smaller profit-loss margins. This is also keeping these materials out of the landfill. The question is if this will be short-lived or if it is a momentum that can be kept up for years to come. Some of the prices for these materials are already falling.
DETAILS: How to read plastic recycling symbols
At RoadRunner, we know you’re paying more for everything right now. That’s why we’re working hard every day to save our customers as much money on their waste bills as we can. Our FleetHaul program, which utilizes contracted haulers through RoadRunner, employs trucks that get better fuel economy. RoadRunner’s green technologies create the most efficient routes for those trucks. Our clean-stream recycling ensures higher prices for these increasingly valuable materials.
We know inflation is hitting your bank account. We work to help offset as many fuel surcharges and landfill tipping fee increases as possible. Let RoadRunner work to find a way to save your business some cash. We can weather this storm together and still work For the Greener Good™.
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