Waste & Recycling Services
Industry Alert: As Waste Brokers Consolidate, Your Spend Skyrockets
If your organization is using a waste broker, its already missing out on managed costs, transparency, and advocacy—and thus, optimal bottom-line impact. But with rapid, real-time industry consolidation within the waste broker space, your waste-expense bottom line is now more vulnerable than ever.
So, what exactly does this mean for your organization?
Let’s begin with a review of the general challenges your organization faces when partnering with a broker:
If you've been using a waste broker, your costs have likely skyrocketed in the last couple of years. While inflation has assuredly played a role in rising costs across essentially all industries, the waste industry has been especially adept at “margin grabbing,” increasing costs to extents dramatically exceeding actual changes in haulers’ costs.
And here’s the dirty little secret as it relates to waste brokers: they’re perfectly happy to let it happen, passing through exorbitant hauler increases and giving themselves a raise in the process. By doing this, the broker effectively becomes a multiplier of the industry’s margin-grabbing, further harming your bottom line.
While brokers frequently market themselves as customer advocates, it’s critical that buyers understand the truth; brokers actually have a disincentive to advocate for their customers in the face of hauler increases—because the increases grow the brokers’ profits, too.
Lack of Transparency
To make matters worse, a lack of transparency in broker invoices means you as the customer aren’t even able to be your own advocate.
When your broker sends you a consolidated invoice, all that invoice really tells you is what that broker is charging you for the services rendered by the haulers for that month. It doesn’t tell you the payments actually being made to those haulers by your broker. How can you advocate for your organization and ensure you’re billed correctly when you don’t know the line-by-line hauler charges?
With no incentive for your broker to advocate for you, and a lack of transparency severely limiting your ability to advocate for yourself, aligning with a broker essentially strips you of any control over your waste disposal category.
We can all agree that waste brokers are a convenient option for managing your waste disposal category—at least when it comes to time and management of the actual service.
But what about cost?
There is often an assumption that along with making things easier, brokers provide marketplace advocacy and defense against cost increases. But the truth is, because their business does not benefit from defending your bottom line after the deal is signed, brokers have not built this sort of advocacy into their models.
A broker’s bottom-line interests simply aren’t aligned with their customers’ bottom lines.
Unfortunately, the realities facing customers of waste brokers are steadily worsening as the industry landscape rapidly consolidates:
- Higher costs are inevitable as the acquiring brokers claw back returns on their investments.
- Spend visibility is reduced even further in the integration of the acquiring and acquired IT systems. You can’t control the spend you can’t see.
- Less competition means that with fewer broker options, there are fewer—and in some cases, hardly any—places to threaten to take your business. Your leverage is severely diminished, which means there’s little chance of mitigating the effects of higher costs and restricted visibility on your organization’s bottom line.
All waste broker customers’ costs have increased in recent years. And even if your program seems on sure footing at the moment, that is not likely to last as the industry rapidly consolidates.
Now is the time to evaluate alternatives to your waste broker. Rising costs and even less transparency await those who do not.