As initial phases of the COVID-19 pandemic led to a shift in waste volumes, from the corporate world to stay-at-home life, they may have subsequently affected container demand as well.
Jo-Anne Perkins of Cascade Cart Solutions told Waste Dive this “pretty significant uptick” in residential volumes has kept her company’s regional sales managers and customer service representatives busy quoting and selling carts to haulers in recent months.
Perkins, vice president of environmental systems and services for Cascade, said a significant portion of the company’s commercial business has been temporarily suspended so it reassigned resources to react to the market change.
While declining to calculate a specific figure – since spring and summer are traditionally Cascade’s busiest seasons, making it hard to fully determine the pandemic’s effects at this point – Perkins said “our hauler customers are very focused on the additional tonnage at the residential curb.”
Brett Belda, vice president of sales at SSI Schaefer, reported an unequivocal decline in commercial container demand in most parts of the country, due to the “freeze or cancellation of service with businesses in shut-down mode due to COVID-19.”
Because of ensuing increases in residential waste generation, Belda told Waste Dive that Schaefer has seen “some increase in cart sales” to accommodate the additional volumes. As for new municipal cart programs, he observed “some cities have opted to delay cart implementations due to reduction in funding streams, while others have accelerated the programs due to the safety benefits of carted collection.”
Belda described a clear impact on capital expenditures, especially at the onset of the pandemic, with more stringent spending procedures and policies across the board.
“Municipalities have seen decreases in funding streams and there have been financial implications from the commercial business shutdowns,” he said.
Wastequip, another major equipment company for the waste and recycling sector, declined to comment on its recent sales trends.
Sales and spending trends
This initial shift in container demand corresponds with broader volume shifts and spending strategies reported by many of the industry’s largest haulers for months.
Janette Micelli, spokesperson for Waste Management, told Waste Dive the company is “proactively managing capital spending – particularly containers – to reflect changes we are seeing in our volumes.” Purchases of large steel containers have been lower compared to 2019, given a 16% decline in the company’s commercial business during the height of the pandemic.
The procurement of plastics carts for residential pick-up also experienced “a slight pause” thanks to COVID-19 disruptions, Micelli said. Nevertheless, she said Waste Management anticipates cart replacement purchases to be in line with historical patterns and said year-over-year cart purchases for residential service are slightly up.
This tracks with average residential volumes increases of as much as 25-30%, Stifel Managing Director Michael E. Hoffman said during a June SWANApalooza presentation. While those levels have since come down, average residential volumes are still believed to be much as 10% over pre-pandemic levels.
Schaefer’s Belda relayed rumors of increases to 50-100% (or more) in residential waste and recycling generation for some areas. While he said the number of carts offered to residential accounts has increased in some cases, Belda added, “I would not say this is a standard transition.”
Like other haulers, Republic Services similarly reported volume shifts and initial plans to scale back its capital spending on certain equipment including containers. The company reported an 11% decrease in total yards collected during April, and container weights down by 20%, with trends beginning to improve as of its latest earnings call in May.
At the time, CEO Don Slager said the majority of commercial clients had merely “scaled back their service” but he described the volume shifts as notable. “Because [residential] is way up,” Slager concluded, “commercial or small container is down.”
During their Q1 calls, Republic reported a 15% increase in residential container weights and Waste Management saw a 25% increase – as compared to 2019. Both noted this came with higher collection and disposal costs, as most customers are billed fixed rates based on the size of their containers.
While Waste Management’s Micelli confirmed the company has taken steps to manage costs and capital spending to offset such revenue declines, most of the reductions are expected to be in landfill capital, with opportunities for “flex spending” on containers and heavy equipment.
Beyond the basic volume shifts from commercial to residential, the pandemic has also brought other disruptions. Because organics are typically heavy, said Cascade’s Perkins, some municipal customers are re-evaluating programs that were scheduled to roll out earlier this year.
“We had a large organics program stall for a few months due to COVID,” she said. It’s now back on track, but apprehension is widespread. Other municipalities have delayed implementation of recycling programs or automated collection programs because of pandemic-related budget shortfalls or staffing shortages. At the same time, Perkins doesn’t expect some of those demands to change, noting that “in communities where recycling is offered, we are seeing more material at the curb, which needs to be collected, processed and sold to market.”
Waste Management COO John Morris described this unprecedented time as “an opportunity to permanently change our business processes, our customer service offering, our work” during the company’s latest earnings call, raising the question of whether some changes are here to stay.
“It’s difficult to assess what ‘long-term’ or ‘temporary’ defines,” Belda said, acknowledging this situation has proven that flexible schedules in a work-from-home environment can yield strong results in work output. “I predict that moving forward, some roles will morph into fully remote, while others will shift into hybrid roles with lesser demands of onsite expectations.”
Perkins also referenced the temporarily higher unemployment benefits some people are receiving through July, which means more of them may be at home, as another change that could be affecting residential collection needs. Like Belda, she also envisions a large segment of the working public establishing permanent home offices and thinks this is one of many factors that could change demand for carts and containers.
“[It’s inevitable that the trash/recycling that was being generated in offices moves to residential collection programs,” said Perkins. “I think COVID-19 has permanently changed the face of how we do business in America.”