This ad will close in 15 sec
Tags
Solid Waste

Examining the pros and cons of outbound and inbound blue box processing compensation models

This article is from CIF Connections Blog, October 19, 2018.

The question of how to compensate a MRF service provider is one that was brought up recently in a CIF (Continuous Improvement Fund) blog. In these times of tightening market requirements, municipalities and service providers are rethinking compensation models. Payment against inbound vs outbound tonnage can both work but there are key items that need to be considered, which include the quality and composition of the inbound material and the term of the contract.

Compensation based on Marketed Tonnage is Sensitive to Markets and Material Quality Shifts

Compensation based on outbound, marketed tonnage places the onus on the contractor to maximize the capture of recyclables but also produce a marketable product. However, with this type of contract the contractor is fully exposed to risk and implications associated with an increase in contamination levels or change in the composition of the material. A long-term contract based on marketed tonnes may require the contractor to upgrade the facility at their cost in order to address these unpredictable variables. Not surprisingly, this scenario can lead bidders to increase their initial processing bids to mitigate the risk. It may also lead to mid-contract requests for additional compensation and disputes between the parties, particularly where the contract includes provisions that specify performance requirements such as material capture rates.

Compensation based on Inbound Tonnage Can Reduce the Contractor's Risk

Compensation based on inbound tonnage, on the other hand, may provide greater assurance to the service provider that they will be fairly compensated regardless of inbound quality and inability to market sorted materials in depressed market conditions. This ultimately lowers the service provider's risk and potentially reduce initial bid prices.

However, performance requirements such as capture rates become essential if compensation is based on inbound tonnage. Even with this approach, the contractor will still make assumptions about recovery and revenue so a dramatic change in material quality, composition or market conditions may force them to seek compensation. This risk increases with the length of the contract.

Time is the Enemy

Whether compensation is based on inbound or outbound tonnage, providing a contractor with a longer-term contract gives them the certainty necessary to make and amortize capital investments that ultimately benefit both parties. However, as noted, the risk of material changes to the inbound stream and markets increases with the term of the contract. To combat these risk factors, many municipalities are now considering placing greater assurances on inbound material mix and quality. They're doing this by providing prospective bidders with detailed material composition and compaction rate information through the procurement process and then committing to carrying out waste composition audits over the term of the contract. Ultimately, success is dependent upon:

- a mutual understanding of the audit methodology to be utilized to determine inbound quality;
- a well-defined process to determine what is considered contamination; and
- a clear process to address and for compensation for changes to the inbound PPP stream over the term of the contract.

This is echoed by Paulina Leung of Emterra Group who commented "as service providers we want recycling programs to succeed. Learning from the past and looking into the future, it is therefore important that service agreements provide equity for both parties, assign risk where appropriate, and create conditions for an adaptable and responsible program. We recommend that what this shift will look like be clearly spelled out in the RFP/contract."

Latest News

Tags
C&D Recycling

Metso to expand NW Rapid crushing plant range

The NW Rapid series models are electric driven and they have Metso's IC(TM) Series crushing automation as a standard feature.

Metso is introducing new higher capacity models to its popular wheel-mounted Metso NW Rapid series. In addition to a bigger jaw crusher model, the NW Rapid units are now also available with a variety of robust cone crushers, including the first model with the MX crusher. Easily transportable using standard prime movers, over a thousand NW Rapid models have already been sold into aggregates and C&D recycling applications.

Read More

Tags
Composting

Composting Council Research Education Foundation releases report on soluble salts in compost

Composting Council Research Education Foundation releases report on soluble salts in compost

Compost contains a multitude of essential nutrients for plant growth, such as nitrogen (N), phosphorus (P) and potassium (K), and can also be a source of organic matter. However, recent concerns and criticisms have been directed toward composts with a high concentration of soluble salts. Soluble salts refer to the amount of soluble ions, such as calcium (Ca2+), potassium (K+), magnesium (Mg2+) and sodium (Na+), present in compost. Soluble salts are measured indirectly and cumulatively through electrical conductivity (EC). 

Read More

Tags
Industry News

Sierra International Machinery announces acquisition of Wolf Pack Enterprises and establishment of East Coast Service Center

Left to right: Jose Pereyra, John Sacco, Wayne Wolf, Antonio Torres and Doug Barnett.

Sierra International Machinery has announced the acquisition of Wolf Pack Enterprises, a heavy equipment service provider based in New Jersey, and the establishment of the Sierra East Coast Service Center. Wolf Pack Enterprises has been the preferred contract service provider for Sierra equipment since 2012.

Read More

Tags
Fleets & Technology

Portable vehicle scales​ help heavy-haul carriers stay compliant

Heavy-haul carriers transport oversized objects using public roadways. While these loads may weigh hundreds of thousands of pounds, operators must still comply with permitted limits, while also completing their job safely. Intercomp has a variety of options to fill this unique application for a range of applications including construction, oil & gas, waste and recycling, heavy-haul transportation and electrical utility.

Read More

Tags
Tire Recycling

Over $11 million in grants issued by CalRecycle to help fund tire recycling

Over $11 million in grants issued by CalRecycle to help fund tire recycling

The California Department of Resources Recycling and Recovery (CalRecycle) based out of Sacramento, has issued grants totalling nearly $11.1 million to 31 communities and nine businesses to fund projects to reuse and recycle waste tires. CalRecycle announced the grants January 4 under its Tire Incentive Program and its Rubberized Pavement and Tire-Derived Aggregate grant programs.

Read More

EuPC publishes results of its 2nd survey on the use of recycled plastics materials

EuPC publishes results of its 2nd survey on the use of recycled plastics materials

From January till September 2018, the European Plastics Converters Association (EuPC) conducted its 2nd European survey on the use of recycled plastics materials (rPM) in Europe's plastics converting industry. Following the period of 9 months during which 376 companies from 21 different countries filled in the online questionnaire, EuPC now published the results in cooperation with Polymer Comply Europe SCRL. (PCE), which conducted the survey on behalf of EuPC.

Read More

Tags
C&D Recycling
Industry News

Anaconda Equipment joins McLanahan family of companies

While Anaconda is joining the McLanahan family of companies, they will continue to operate in the marketplace as an independent brand. Their dealer network will remain and continue to support Anaconda customers around the globe.

In 2017, McLanahan Corporation began a partnership with Anaconda Equipment of Northern Ireland to distribute and sell Anaconda's line of mobile track equipment. As the relationship between the two companies progressed, it became clear that their values and business styles were closely aligned. Today, the two companies are proud to announce that Anaconda Equipment will officially join McLanahan Corporation's family of companies upon legal closing within the next 30 to 60 days.

Read More

Tags
Plastics Recycling

​Nestlé Waters North America aiming for 25 percent recycled plastic in its packaging by 2021

​Nestlé Waters North America aiming for 25 percent recycled plastic in its packaging by 2021

Nestlé Waters North America (NWNA) announced in December that it will achieve 25 percent recycled plastic across its U.S. domestic portfolio by 2021. The company plans to continue expanding its use of recycled materials in the coming years, further setting an ambition to reach 50 percent recycled plastic by 2025.

Read More

Tags
Tire Recycling

Goudsmit builds magnets for iron-free carbon black

Goudsmit builds magnets for iron-free carbon black

Goudsmit recently built two magnets to be used for the production of iron-free carbon black by a large European manufacturer. These self-cleaning, rotating magnets remove iron particles as small as 30 microns from the very dry, poorly flowing conductive carbon black used for lithium-ion batteries.It is essential that this product is 100% metal-free, because metal particles would change the conductivity. In this line, the rotating magnets process at a relatively low capacity of 1500 kg per hour. If necessary, however, such magnets can process at  capacities of up to 40 m3 per hour. 

Read More

Tags
Plastics Recycling

BASF making products with chemically recycled plastics for first time

Dr. Stefan Gräter and Dr. Andreas Kicherer showing a sample of pyrolysis oil and thus produced plastic in front of the Steamcracker.

BASF is breaking new ground in plastic waste recycling with its ChemCycling project. Chemical recycling provides an innovative way to reutilize plastic waste that is currently not recycled, such as mixed or uncleaned plastics. Depending on the region, such waste is usually sent to landfill or burned with energy recovery. But chemical recycling offers another alternative: Using thermochemical processes, these plastics can be utilized to produce syngas or oils. The resulting recycled raw materials can be used as inputs in BASF's production, thereby partially replacing fossil resources.

Read More

Tags
Paper Recycling
Plastics Recycling

SamurAI sorting robot finding success in the recycling industry

In the spring of 2018, Plessisville, Quebec-based Machinex introduced its new SamurAI sorting robot, which, according to the manufacturer, has since generated a lot of industry interest. Nearly six months after its launch, the response of the market has been very positive and nine robots have been sold to date. The first two SamurAI in Canada have just been installed in Quebec while six more robots will be installed by next year in Canadian sorting centers. Moreover, the company says they continue to have regular requests from customers who are greatly interested in this cutting-edge technology.

Read More

Tags
Maintenance & Management

Electro Static Technology appoints Mathew Laufik as global sales manager

Electro Static Technology appoints Mathew Laufik as global sales manager

Electro Static Technology, the manufacturer of AEGIS Shaft Grounding Rings, and specialist in low- to medium-voltage motor protection technology, has appointed Matthew Laufik as Global Sales Manager.  In this new role, Mr. Laufik will be responsible for the sales of AEGIS products to motor repair shops, motor manufacturers and end users in a range of processing industries worldwide through the company's international sales organizations and distribution network.  He will also manage all sales, marketing, and customer service personnel.

Read More

Tags
C&D Recycling
Environmental
Occupational Health & Safety
Solid Waste

Latest mobile dust suppression design features Tier 4 Final Gen Set

The DB-60 Fusion dust suppressor features a Tier IV Final-compliant generator.

BossTek has updated its family of self-powered dust suppression equipment with Tier IV Final-compliant generators, ensuring compliance in all 50 states and Canada.  BossTek made the announcement with the debut of the new DustBoss DB-60 Fusion, a field-proven suppression system driven by a high-reliability 25 HP electric motor and paired with a gen set powered by a heavy-duty 4-cycle indirect injection diesel engine.  Designed, engineered and assembled in the USA, the generator features a dual-containment fuel cell, heavy gauge lockable enclosure and oversized brushless alternator for easy starting.  

Read More