Executive Briefings

'Garbitrage' Proposed as Way to Make Recycling Profitable for Municipalities and Companies

Five years ago, Waste Management recycled around 6 million tons of materials in the U.S., according to CEO David Steiner. It set a goal of recycling 20 million tons by 2020 and began up to $100m a year in recycling facilities and technology.

Last year, the company recycled 12 million tons of materials. The company has even helped General Motors and Toyota turn manufacturing facilities in zero-waste centers, turning old plastic armrests into pelletized fuels. When you think of WM, think less waste, more management.

Unfortunately, the commodities markets aren't playing along, said Steiner. With the slump in commodity prices, the profits from recycling have dried up.

"Recycling is not profitable. We have lost money in recycling over the last one and a half years," he said. "Investment has slowed to a trickle."

Steiner, however, says that doesn't mean that Waste Management will dump the idea. The benefits of recycling"”fewer landfills, less demand for virgin materials - are still there. Instead, he has begun to advocate new types of contracts that limit risks for both sides of the transaction. When commodity prices are high, municipalities can share a greater portion of the resale revenue. But a floor will also exist so that the trash hauler' s profits are eviscerated by high diesel costs or other factors beyond its control.

In other words, garbitrage.

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Keywords: green logistics, sustainable supply chains, supply chain management, logistics & supply chain, recycling materials, zero-waste initiatives

Last year, the company recycled 12 million tons of materials. The company has even helped General Motors and Toyota turn manufacturing facilities in zero-waste centers, turning old plastic armrests into pelletized fuels. When you think of WM, think less waste, more management.

Unfortunately, the commodities markets aren't playing along, said Steiner. With the slump in commodity prices, the profits from recycling have dried up.

"Recycling is not profitable. We have lost money in recycling over the last one and a half years," he said. "Investment has slowed to a trickle."

Steiner, however, says that doesn't mean that Waste Management will dump the idea. The benefits of recycling"”fewer landfills, less demand for virgin materials - are still there. Instead, he has begun to advocate new types of contracts that limit risks for both sides of the transaction. When commodity prices are high, municipalities can share a greater portion of the resale revenue. But a floor will also exist so that the trash hauler' s profits are eviscerated by high diesel costs or other factors beyond its control.

In other words, garbitrage.

Read Full Article

Keywords: green logistics, sustainable supply chains, supply chain management, logistics & supply chain, recycling materials, zero-waste initiatives