Reduced Waste Volumes
The economic downturn has led to a continuing reduction in domestic and commercial waste volumes, although the rate of contraction has slowed from recent years. Industry over-capacity has prompted aggressive product pricing, resulting in the failure of several operators within the sector.
As for many other sectors, Resource Recovery experienced considerable cost increases, particularly due to rising fuel costs in collection activities. A large increase in the landfill levy saw greater volumes of waste being exported. Many integrated operators absorbed the landfill levy rather than passing it on to the generators of waste, thereby discouraging the recycling and recovery of waste through the ‘polluter pays’ principle.
Prices & Margin
The exporting of waste has resulted in downward pressure on landfill gate fees which, together with the proposed levy increase, leaves a very difficult trading environment for landfill operators. There has also been a significant drop in demand and prices for commodities recovered from recycling operations. These increased residual disposal costs, combined with reduced yields for recovered materials and over capacity within the sector, have ensured that yield and margin per customer remain below target.