Surging recycling processing fees

[Doug Koplow]

Hi All,

In the Northeast, we are continuing to see surging processing fees. They have risen from zero to $130 to $140/ton over the past decade. Unlike other large fixed capital businesses that run as close to 24/7 as they can, the MRFs in our area seem to run less than two shifts per day, and not every day of the week. I understand that maintenance and upgrades are an issue, but this is the case with every other process industry as well.

I am wondering if anybody has evaluated processing fees across the country, or assessed the impact that more intensive utilization of MRF capacity could have on reducing average processing costs per ton. Empirical data on the cost structure for MRFs would probably allow me to ballpark this as well.

Thanks,

Doug

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Doug Koplow

Earth Track, Inc.

485 Massachusetts Ave. #3

Cambridge, MA 02139

(617) 661-4700

www.earthtrack.net

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[Neil Seldman]

HI Doug,

I hope you are well and safe.

From my view the answer to your question is monopoly pricing. My sources (independent waste hauling and recycling companies) is that monopoly pricing adds 1/3 to the cost of processing, hauling and landfilling..

Neil

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[Nancy Poh]

Based on what you are looking for, this is the most recent that I could find from Chittenden County in Vermont:

Materials Recovery Facility Proposed Budget Detail FY23
https://cswd.net/wp-content/uploads/04.26.22-MRF-3pt.pdf

Based on this report, you can also write to Susan Graff, sgr...@recycle.com for an update on: 

MRF FINANCIAL PRO-FORMA MODEL SUMMARY
For more information about the pro-forma model or to apply this tool to a specific MRF in
a community interested in recycling this material, MRFF collaborative members should
contact Susan Graff, sgr...@recycle.com. (According to LinkedIn, she is still with Resource Recycling Systems https://www.linkedin.com/in/susan-graff-rrs/)
https://www.materialsrecoveryforthefuture.com/wp-content/uploads/2018/01/MRFF-Financial-Pro-Forma-Model-Summary.pdf

Enjoy the weekend ahead.

[Nancy Poh]

Also, based on this article you should not have any problem getting the information you need from Northeast Recycling Council's (NERC) as their surveys covered MRFs in Massachusetts:

Survey shows fast-rising MRF processing costs

https://resource-recycling.com/recycling/2020/06/16/survey-shows-fast-rising-mrf-processing-costs/#:~:text=The%20value%20of%20a%20blended,the%20third%20quarter%20of%202019. 

Mary Ann Remolador is very active here:

NERC office at 802-254-3636, or send an email to Mary Ann Remolador, Assistant Director (mar...@nerc.org).

[Doug Koplow]

Thanks for your ideas Nancy. The challenge is that NERC's reported data are single point averages and the variation (and the reasons for that variation) across facilities is not made public. Since the exact structure of each MRF is different, and the average cost per ton is affected by throughput and other factors, it is reasonable to assume that there is variation across the plants. Yet we can't see that; and all of the MRF operators are bidding very similar processing fees that are rising sharply year-on-year. Also of interest, and taken from the most recent NERC market summary:

"Several MRFs also reported processing costs 2 for the period April – June 2022. The average processing cost per was $85/ton. This represents a decrease of 2% from the previous period. We have found that the average processing costs change significantly from quarter to quarter – sometimes up and sometimes down. We do not have an opinion or explanation for this."

As there are a small number of MRFs, a smaller number of MRF owners, and the haulers are generally linked to the firm owning the sort facility, it is likely that market power is at least part of the story. The questions are whether there are also other addressable factors at play (for example, low utilization of the plants 24/7 theoretical capacity); and if market power is a factor, are there things that municipal customers can do to improve their bargaining position.

Doug

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[Nancy Poh]

These are the possible reasons why the average processing costs for Materials Recovery Facilities changes significantly from quarter to quarter.

If there is a price increase in US utility bills and fuel wouldn't it also affect the cost of running the MRFs? Cost for transportation will also increase

https://www.theguardian.com/us-news/2022/mar/13/us-utility-bills-energy-prices-increase

Not all recyclables are sent to MRFs and the volumes are likely to decrease due to some of these Recycling and Waste Management Trends listed in article by Treehugger:

Companies facing financial, environmental and social challenges are moving away from the traditional "take-make-waste" manufacturing paradigm towards a more "cyclical, restorative way" of doing business. If these companies are reducing the use of raw materials and re-using their used material, that will mean that less recyclables are sent to MRFs but their running cost will still be the same.  

https://www.treehugger.com/recycling-and-waste-management-trends-watch-out-near-future-4858221

[Nancy Poh]

I found more reasons from TrendHunter why there will be less recyclables sent to MRFs in future:

https://www.trendhunter.com/pro/category/environmental-trends 

[Nancy Poh]

It is also because of contamination problems caused by single-stream recycling which began in the United States in the 1990s. Here is why less recyclables will be sent to MRFs in Philadelphia. They send material to an incinerator from neighborhoods identified with the most contamination in its recycling bins. Trash removal companies are taking segregated recycling straight to landfills or incinerators.
https://www.nytimes.com/2019/03/16/business/local-recycling-costs.html

I can pick some more reasons that will increase cost to run MRFs from reading article at this link:

https://www.colorado.edu/ecenter/2022/02/04/challenges-recycling 
-Non-recyclable materials being put in the recycling stream (such as liquids or plastic bags) that contaminate recyclable materials and compromise recycling machinery.
-The many safety risks from contaminate recyclable materials can turn many workers away from the  waste/recycling industry. MRFs may have to pay more to attract workers. 

-In order for a city to have an effective recycling system, adequate services (like separate bins and safe recycling centers) are needed. Some cities just don’t have the government support to have adequate recycling services. Lesser material for MRFs if there are no separate bins and no one to create public awareness in order to encourage residents to recycle.

MRFs can operate at a loss if there are no buyers for their sorted material. They may have to increase storage space for material they can’t sell or they have to stop collecting it.

[emsees]

Something also occurred to me regarding the expenses of waste management.

The truck driver shortage is a longstanding thing, it goes back 10 or
15 years or so prior to the pandemic, but it was exacerbated by the
pandemic.

In transfer stations, at MRFs, and even at landfills, etc. there's a
lot of use of heavy equipment .. bulldozers, loaders, and the like.
People capable of operating this equipment might also be qualified
truck drivers. So, during this crunch time when different companies
were offering significant bonuses, these workers might be jumping jobs
for better pay, which might lead to raises or bonuses in order to
retain workers in this segment.

Another issue might have been the need to hire additional workers to
compensate for missed days by potentially sick workers during a
pandemic.

And for that matter, there might be increased costs due to the
potential need for workers to wear PPE that they might not have
previously worn considering they're processing waste that might
contain biohazards and people are more sensitive to the possibility of
these potential disease vectors and contaminants.

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Michael S