I once worked with a printer who made a statement that really caught my attention, I mean stopped me dead in my tracks. “My only profits are what we get from the monthly recycling revenue check”. Wow, a field of opportunity there to jump in and help consult on his entire business, but reality is the back-door revenue with outbound recycling materials is a source of income for the printer. So many printers miss that opportunity to maximize on that revenue stream or spend all their focus on their traditional revenue generators they forget about it.
So, maybe you are reading this, and you know the market well, you keep up with the monthly published pricing for each grade, sortation and segregation techniques, regions, mill direct versus mixed loads and how the off-shore exports play into this area. Maybe you just trust your provider, that has been in place forever, to provide you with a check that seems like free money each month to collect your recycling without really understanding how it works exactly.
I worked with another printer who made the statement my revenue is up 5% over last year so I must be getting paid well. Really? What if you are generating 10% more scrap while the market is flat, or what if you are generating 20% more scrap and only getting 5% more while the market is up 15%? Many factors influence what you get in exchange for your recycling generation and you need to be educated in that area of your business just like you would in any other area of opportunity.
Factors that affect your revenue are tied to market pricing for that grade, region of the country, presentation, sortation, and segregation. Understanding what grades, you generate and how to maximize the sortation and segregation of that is very critical to enhancing your revenue stream.
Grading – The Institute of Scrap Recycling Industries (ISRI) defines the grades or categories for all types of scrap that they fall into. For paper there is a set of grades all given numbers to identify the category of the grade. For other items such as metal or glass they go into that as well in detail.
Pricing – Monthly publications are available that show what the market is paying for a given grade number, in what region of the country and the low and high side of the market. Lots of numbers for sure but understanding and more importantly indexing those numbers back to your actual generation is key to securing the best market pricing you can and staying true to the market’s ups and downs.
Presentation – This includes how you present (baled or loose) but as well how you sort and segregate your recycling grades. Are you presenting baled material, loose on skids material or a combination of each? Mills only accept clean, segregated and baled material. If you are not doing that, your provider is and they are not doing it for free. If you mix multiple grades into the same bale, the result will be a lower overall value for the bale since the lowest grade will dictate your pricing. Small contaminants in your bales can mean rejected entire loads at a mill or at a minimum serious down grading of the value when at their door for the entire load. At that point the cost to bring the load back, correct the mistake and reship outweighs the revenue loss. The claim that only a small portion of the bales had contaminants is like claiming that you’re only a little bit pregnant. You are, or you aren’t.
Understanding the market and creating a contract with your provider that includes indexes for any major generation grade is key to maximizing your revenue as well as the peace of mind that you are getting a fair value not only on day one but on going, true to the market’s ups and downs.
Need help with your recycling revenue stream in preparing a comparative analysis of your recycling revenue to the market? We’ll help you for free (of course there is a catch but really no help, no cost) Contact our team for more details. Visit us at www.paprm.com