Waste Management* is North America’s leading provider of comprehensive waste management environmental services. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. We serve more than 20 million residential, commercial, industrial and municipal customers through our Collection, Landfill, Transfer, Recycling and Other lines of business. About 70% of the waste that we collect is disposed of at our own landfills, or internalized, which allows us to realize higher consolidated margins and stronger operating cash flows.
Collection Revenue Mix
*Waste Management, Inc. is a holding company, and all operations are conducted by its subsidiaries. References to “Waste Management,” “the Company” or “WM” refer to Waste Management, Inc. and its consolidated subsidiaries, unless context provides otherwise.
Collection operations are our largest revenue driver. Collection involves picking up waste and recyclables from where they were generated and transporting them to a transfer station, material recovery facility (MRF), or landfill. We provide services to many types of customers, including commercial, industrial, residential and municipal. Overall, about 40% of contracts are based on pricing that fluctuates with an index while the remaining 66% periodically increase with market prices. Generally, contracts based on an index are municipal contracts or franchise agreements.
For commercial and industrial customers, typically we have a three-year service agreement. The fees are determined by factors like collection frequency, type and volume or weight of the waste collected, and cost of disposal. As part of the service, we provide steel containers to most customers to hold their waste between pick-up dates. Industrial services can either be permanent or temporary. Permanent service indicates that a bin is always at the customer site, like a manufacturing plant or a shared container that a large apartment complex would require. We often provide compactors to these customers as well. Permanent service typically has a monthly rental fee and charge per haul. Temporary service is for short-term projects like construction. Temporary service is based on market pricing.
Commercial and industrial customer churn is about 9%, meaning that on average customers stay with us for more than 10 years.
Residential customers typically fall into two categories, municipal or open market. Municipal contracts are usually three to ten years while open market customers can sign up for services under a monthly subscription. The fees for residential collection are paid monthly in advance either by the municipality or directly by the residents receiving service.
For residential collection services, we commonly use a rear-end loader truck or automated side-loader truck. These trucks are used primarily to empty smaller containers. Rear-end loaders can be loaded manually or equipped with a mechanical tipper. They typically require a driver and one or two helpers. Automated side-loaders use a mechanical arm to lift and dump containers and can be operated by one employee. Both trucks have a compactor to compact waste between stops.
The most common residential bin is a 96-gallon toter.
The roll-off truck is the most common truck used to service industrial customers such as manufacturing facilities and construction sites. It is a flatbed truck with a container that rolls off the chassis. Generally, one employee can operate a roll-off truck.
Containers typically come in standard sizes of 10, 20, 30 or 40 cubic yards.
The front-end loader is the most common truck used to service commercial customers like restaurants, hotels, and retail stores. On the front of the truck are forks that fit into the sleeves of a container. The forks allow for the containers to be lifted from the front of the unit to dump waste into the compaction body. Generally, one employee can operate a front loader.
Standard commercial containers range in size from 2 to 8 cubic yards.
Landfills are the main depositories for solid waste in North America. We have the largest landfill network with about 250 landfills in the U.S. and Canada. Operating landfills requires experience, expertise and capital. Our well-positioned network of landfills represents critical North American infrastructure and provides a significant barrier for new entrants.
The operation and closure activities of a solid waste landfill include excavation, construction of liners, continuous spreading and compacting of waste, covering of waste with dirt or other acceptable material, and constructing final capping of the landfill. These operations are carefully planned to maintain environmentally safe conditions and to maximize the use of the area of the landfill that can be filled with waste, or airspace. On average, we have about 50 years of life remaining at our landfills, excluding potential expansions. However, landfill markets are highly localized. The fees charged at landfills, called tipping fees, are based on factors like competition as well as the type and weight or volume of waste deposited.
There are different types of landfills to handle different types of waste. The most abundant type is municipal solid waste (MSW), which is the trash generated by people and businesses. There also are more strictly regulated landfills for hazardous waste, construction & demolition waste, and special waste, as they all require special handling.
Responsible landfill operations include leachate and landfill gas management. Leachate is liquid that has filtered through the landfill. It consists primarily of precipitation with a small amount coming from the natural decomposition of the waste. It is necessary to collect leachate so that it can be removed from the landfill and properly treated or disposed of. Landfills also produce landfill gas throughout their lives. Many of our landfills have renewable energy facilities to convert this gas to electricity or renewable natural gas that can be sold to many types of customers. We are proud that we were at the forefront in developing and implementing many of the practices that now constitute the standards for environmentally responsible landfill design and operation.
Transfer stations consolidate waste so that it can be compacted and transported to disposal sites. We have a network of more than 300 transfer stations where we and third-party haulers deliver waste. In many cases, these transfer stations operate like a remote gate to our landfills.
Access to transfer stations is critical to haulers who collect waste in areas where there are no disposal sites. Fees charged to third-party haulers are based on the type and volume or weight of the waste deposited, distance to the disposal site, and market rates for disposal costs. Our transfer station network allows us to improve internalization and manage disposal costs.
Recycling provides communities with an alternative to landfill disposal for many items. It supports our goal to extract more value from the materials we manage. We were the first major solid waste company to focus on residential single-stream recycling, which allows customers to mix recyclable paper and plastic in one bin. Residential single-stream programs have greatly increased recycling participation, resulting in increased volumes of recycled materials. Single-stream recycling is possible through the use of various mechanized screens and optical sorting technologies. Our recycling operations include materials processing, recycling commodities, and recycling brokerage services.
Recyclable materials collected from residential, commercial and industrial customers are directed to one of our more than 100 MRFs (pronounced “murfs”) for processing. Overall, about 60% of recyclables come from residential and municipal customers with the remaining 40% come from commercial and industrial customers. Some of the recyclables we process are purchased from third parties. The price we pay for recyclable materials is often referred to as a rebate. In some cases, rebates are based on fixed contractual rates or defined minimum per ton rates but are generally based upon the price we receive for selling processed goods, transportation costs, and market conditions. We have been focused on revising our rebate structures to ensure that we cover our cost of handling and processing materials while generating an acceptable return on the materials we process and sell.
We market and resell globally the recyclables that we process. We maintain comprehensive service centers that continuously analyze market prices, logistics, market demands, and product quality.
Recycling Brokerage Services
We also provide recycling brokerage services, managing the marketing of recyclable materials for third parties. Our experience in managing recycling commodities for our own operations gives us the expertise to effectively manage volumes for third parties as well.
We also provide other services to our customers such as:
- Strategic Business Solutions provides centralized administration of national accounts.
- Energy and Environmental Services primarily provides specialized disposal services for oil and gas exploration and in-plant consultation services.
- Renewable Energy develops and operates landfill gas beneficial-use projects to produce electricity that can be sold to utilities, industrial customers or natural gas suppliers.
- We provide several other ancillary services to our customers like Bagster® to collect household project waste, portable restroom servicing and solar powered trash compactors.