If you don’t think the business of hauling municipal solid waste (MSW) long distances is a vibrant and growing segment of the refuse industry, just ask New York City-based Evercore Capital Partners (ECP), the private equity investing arm of Evercore Partners, a $376 million “boutique” financial advisory and Wall Street investment firm. ECP was so bullish on the long-haul waste market that five years ago it paid an undisclosed sum for a majority stake in Chicago-based Mr. Bult’s Inc. (MBI), one of the largest providers of long-haul solid waste transportation services in the United States.
“We were attracted to MBI because of its leading position in a growing and fragmented [market] sector characterized by a number of promising trends,” noted Neeraj Mital, senior managing director of Evercore at the time.
Mital says those promising trends include steady growth in solid waste generation; the shift in disposal to fewer, larger landfills in more remote, rural areas; the need to transport solid waste over increasingly greater distances; the expectation that trucking will remain the preferred method of long-haul transportation; and the growing propensity for waste companies and municipalities to outsource their long-haul equipment and transportation services to carriers like MBI.
The New Landfill Landscape
This migration to long-haul refuse transportation isn’t a new trend by any means, but it’s one that’s been picking up speed in recent years, according to a recent paper written by Molly Macauley, senior fellow and director of academic programs for the Washington-based think tank Resources for the Future (RFF).
“For centuries, households and businesses in the [United States] disposed of their waste at the local town dump,” she explained. “But starting in the 1990s, stricter government regulation to protect human health and the environment led to major changes in the scale and scope of waste-handling technologies.”
The reduction in landfills is perhaps the most dramatic result of that regulatory shift, which in turn has fostered the growing need for long-haul refuse transport services.
Macauley noted, for example, that the number of landfills operating in the United States declined from nearly 8,000 in 1988 to some 1,750 by 2006. In turn, technological changes in waste management led to a new market structure and industrial organization of waste management services on a national and regional, rather than local, basis, she added.
“Two of the most pronounced differences in handling waste today are that it is now typically hauled long distances and disposal takes place at large, regional facilities,” she pointed out. “The ‘town dump’ has been replaced by an industry operating coast-to-coast and at a much larger technological and financial scale.”
Other disposal methods have became more common as well, such as incineration and the increased diversion of recyclable materials like aluminum cans, plastic and glass bottles, and newspapers. This supports the design and construction of wholly new intermediate facilities like transfer stations, material recovery facilities (MRFs) and waste-to-energy (WTE) facilities – all of which require a transportation component, Macauley stressed.
“At transfer stations, for example, waste is aggregated from neighborhood collection routes into larger trucks for long-haul shipping,” she noted.
“In response to state requirements for local waste management plans, many jurisdictions implemented recycling programs, leading to the construction of new materials recovery facilities (MRFs), at which some recyclable materials were removed from the waste stream before final disposal,” Macauley added. “These changes also led to an increase in long-distance hauling and even interstate shipments of waste by truck, rail and barge companies.”