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Weak market, shipping costs equal more expensive recycling programs

Weak market, shipping costs equal more expensive recycling programs

June 22, 2010
June 22, 2010

The depressed price of recyclable materials on the global market, and the cost of shipping those materials out of state, means the profit margin for Idaho recycling companies is at the break-even point or less. Furthermore, you're subsidizing that decreased revenue with every trash bill you pay.

The cardboard boxes, aluminum cans and empty 2-liter bottles you put in your recycling bin or cart every week is “feedstock” for manufacturing operations all across the world, according to Rachelle Klein, business development manager with Allied Waste in Boise. “As the global economy has slowed, the demand for that feedstock has screeched to a halt,” she said. “So a lot of that buying that was going on even five years ago is a trickle now.”

Low global demand for recyclable materials has a direct effect on your trash bill

“Right now it’s probably a wash, as far as landfilling versus recycling,” said Klein. “There’s not a lot of money to be made in recycling today, until the economy turns around. But it’s still the right thing to do.” Klein explained that the cost of recycling in terms of energy use and pollution in the manufacturing process is a lot less than if virgin materials are mined or harvested to make the same products.

Allied Waste sells the material it collects to Western Recycling, which operates across southern Idaho, from Weiser to Idaho Falls. Western Recycling pays $5 per ton of recyclable material, and then ships it to Material Recovery Facilities (MRFs) in Oregon, Washington and California. “Every place we ship to has a little different number (price),” said Rick Gillihan, manager of Western Recycling’s facility in Boise, “but on average it’s running $40-45 per ton; that’s what we sell the material for.”

While that sounds like the company is turning a tidy profit, Gillihan says most of that margin is eaten up in the shipping. “Depending on where you’re going, it can cost anywhere from $30-40 per ton.”

The low price of recyclable materials, coupled with the cost of shipping the materials to a MRF is reflected in your trash bill. Catherine Chertudi, Environmental Programs Manager with the Boise Department of Public Works, explained that her office goes over costs and revenues with Allied Waste to determine how much residents will pay for recycling in the coming year. “We say ‘this is what the cost of the service was, then this is the revenue stream that offsets that cost.’ Then moving forward, we take all that into consideration.” That figure, along with the cost of other solid waste collections and landfill fees, is what determines what residents pay on their trash bills.

Given the weak market worldwide for recyclable materials, is there any way, short of global economic recovery, to lower the cost of city recycling programs? One way might be to build a MRF right here in Idaho, which could lower the shipping cost. “That’s what our objective is, and we’re working on it diligently,” said Gillihan. “We’re working with the city and Allied Waste to get a commitment from them to supply us with those tons. If we put up a facility, we have to have a commitment on supply to run through it.”

Gillihan says Western Recycling has looked into federal Economic Recovery Zone Facility Bonds, a “stimulus” based, tax-exempt bond program for which the city of Boise and several Idaho counties qualify.

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