Mind the C&I infrastructure gap
Liz Gyekye analyses the latest trends shaping the commercial and industrial waste market
Former Secretary of Defence Donald Rumsfeld once said: "There are things we know that we know. There are known unknowns. That is to say there are things that we now know we don't know. But there are also unknown unknowns. There are things we do not know we don't know."
He could have easily have been talking about commercial and industrial waste, as highlighted as a "known unknown" in a report published by CIWM/Ricardo-AEA consultancy.
The report, entitled Commercial and Industrial Waste in the UK and Republic of Ireland, claims that a data vacuum surrounding C&I waste arisings is creating a reactive market with limited strategic future planning. The document warns that future waste capacity in the UK will not be enough to manage the volumes of arising waste from household, commercial and industrial sources. It predicts that failure to develop infrastructure could lead a potential 15m tonne treatment capacity shortfall for C&I waste by 2020.
The document advises that the current outlook for 2020 suggests that a significant amount of additional infrastructure will need to be developed, beyond what is already planned and proposed.
One main challenge and big gripe from the report is the issue of data - a prerequisite for business planning and infrastructure decisions. This isn't a new problem - this has been plaguing the industry since time began. C&I waste has a number of inherent qualities as a waste stream which undermine any successful data collection and modelling, unlike municipal solid waste data associated with local authority contracts and household waste arisings.
Industry experts who contributed to the report could not agree on how data on C&I waste should be collected and reported in the future.
M+W Group head of waste Neil Bennett says his firm is delighted that the key issue of data was highlighted in the report. He says: "Whilst funding confidence is showing recent signs of recovery, greater certainty in forecasting the size and shape of future waste fuel supply is a fundamental element of the 'confidence' required for investors to commit to developing new capacity or services. Above all, this will, in turn, help develop the maturity of the sector."
Urban Mines managing director Peter Scholes also welcomed the report. He explains: "In terms of the available C&I data, I do think the surveys which have been delivered are sound statistically and do generate good data. The problem is that they are not repeated often enough so that trends can be developed to help in predicting future arisings, and they don't deliver enough granularity.
"They generate data which is useful to governments at national level but not to businesses or funders wanting to understand the likely local feedstock for a new facility, or to local waste planners wanting to understand what provision they need locally to deal with local waste".
But not everybody was satisfied with the C&I report. Eunomia's chairman of consultancy Dominic Hogg, who did not contribute to the research, criticised the actual data in the report and said that it had not convincingly demonstrated a capacity gap as it did not take account of all sorts of treatments in C&I that could be used to deal with the full range of different waste streams.
Data is one thing. But what about future C&I trends? M+W Group's Bennett says that the value of waste resource, coupled with increased awareness of C&I waste management issues and regulation within business, is helping to drive more intelligent service procurement decisions by waste producers.
He says that these trends argue for longer term partnerships between waste producers and collectors or recyclers with facilities capable of producing and aggregating RDF in volume. Those with control of this fuel production capacity will become the main actors in providing C&I waste service, Bennett adds.
Independent waste expert Peter Jones OBE takes a different approach and compared the evolution of C&I waste issues to the role of information technology in revolutionising services provision to market segments that were once thought impenetrable to providers, where he says strong brands in retail find themselves under threat as their customer base is now able to use IT themselves to buy direct from suppliers and have home deliveries which they control rather than the retail intermediaries.
Speaking about historical and future trends, Jones says: "Phase one saw the emergence of national scale operators able to invest in sophisticated IT systems with economies of scale and data systems able to model profitability based on route efficiencies and densities in the early 1990's.
"Phase two saw Biffa as the first to be able to develop one stop shop service packages for multi-site waste producers of the early nineties in retailing, brewing, leisure, hotels and restaurants. Flat rate pricing for the same service from Plymouth to Aberdeen consolidated hundreds of different C&I pricing structures once administered and negotiated on a shop by shop basis with no coherent structure."
He continues to say that phase three has emerged in the last three years whereby the customer is realising that national type large scale contracts need not be 100% in the hands of a single brand supplier. Intermediaries with the appropriate IT, but with no sites or trucks, can cherry pick the best performing collection service providers by postcode and then offer C&I waste producers an efficient and effective service package in segregation, recycling , remanufacture, rebundling them as a single service offering to multi-site waste producers.
Jones also proclaims that established operators with trucks and 'physical' assets such as depots and sites have to concentrate on route density and consolidate their route density advantages to ensure they are attractive to the non-asset base consolidators.
He adds: "The same principles are driving Royal Mail to service online ordering market by us (as consumers) in their vans instead of container trucks delivering to Argos, Comet or Tesco stores. We can see this manifesting for C&I waste in Bath and other cities with the appropriate population density, tonnage of waste or disposal challenges (or combination of all three)."
So, in essence, for the unknowns to become known, Jones concludes that issues around C&I streams will be resolved as the service consolidators with a very low physical asset base remorselessly drive efficiencies of scale and service quality postcode by postcode underpinned by efficient online IT and data management investment.
Liz Gyekye is editor of LAWR