Recycling Market Mess: How Changes in the Recycling Market are Increasing the Costs of your Waste Management Recycling Services
Over the past year, prices for many commodities have plummeted, meaning that it is now cheaper to produce some goods from scratch rather than to recycle old materials. Unfortunately, this means that there is not as much demand for recycled plastics, paper products, metals and glass as there once was. This downturn is being reflected in waste vendors allotting increased recycling costs to customers. Previously, these vendors could take recycled materials and sell them to recyclers for a profit. However, current market conditions have depressed the value of recycled materials so low that vendors now have to pay for disposal instead of receiving a rebate.
Three reasons for the downturn in the recycling commodities market include:
1. Oil prices have collapsed.
2. China’s economy has slowed.
3. Two of the largest plastic recyclers have gone into bankruptcy, and a third is in “administration,” which is a form of bankruptcy.
Out of these three, the price of oil has the most effect on recycling prices. Tom Szakey, CEO of TerraCycle, notes, “If the cost of collection and processing is greater than the material value, then the material becomes non-recyclable. If it’s less, then it’s recyclable…and the material value is 100 percent dependent on oil prices as it’s derived from oil.” When you combine falling oil prices with a decline in the Chinese economy and plastic recyclers declaring bankruptcy, the result is a ”Recycling Market Mess.”
What this means for the everyday customer is that there are going to be increases in costs for recycling services. Waste Management has introduced a “recyclable material offset fee” and Casella Waste Systems has implemented a “sustainability and recycling fee” on their invoices, which is supposed to “float” with the recycling market. However, does anyone really believe that these fees will go away when the recycling market improves?
At Waste Experts, we have seen time and time again that when a new fee is introduced it rarely goes away. Do you remember when airlines told us that the checked bagged fees were due to the fact that gas and oil prices were so high? Now, oil prices are at record lows, and guess what — we are STILL paying checked bagged fees. Because the Waste Industry tends to be a “copycat” industry, you can be sure that other vendors will be looking to implement similar fees.
How can Waste Experts help?
At Waste Experts, we have also seen vendors raise recycling rates above what their contracted price increases allow. Waste Experts has been successful at challenging those increases and negotiating until vendors adhere to the contracted pricing that they originally agreed to.
The most important thing that any facility manager can do is monitor their recycling invoices, and question any fees or increased charges that appear on them. Of course, if you are concerned about rising recycling and trash costs, contact the friendly, expert and reliable staff at Waste Experts — we will do a free review of your current waste management spend.