Key Takeaways from Day One of WasteExpo 2018

The Waste360/Stifel Investor Summit took place on Monday. During the summit, Michael E. Hoffman, managing director/group head diversified industrials at Stifel, spoke with a number of key players in the industry about a variety of topics, including the Canadian market opportunity, the state of the industrial economy, the changing face of solid waste, the rise of technology and the current and future state of medical waste and document destruction in North America.

At the summit, Ron Mittelstaedt, CEO of Waste Connections, shared that the company has seen significant growth over the past 20 years, increasing materially in size. This is partially due to the fact that the large company focuses on operating its markets/segments as a smaller, nimble company.

Mittelstaedt and Waste Connections CFO Worthing Jackman agreed that they do not want to overcomplicate what should be a simple business.        

Mittelstaedt also commented on the recently enacted China import ban and contamination standard, saying, “This is a sustained decline; it’s not something that’s going to be a short term decline in commodity prices.”

Advanced Disposal CEO Richard Burke ranked safety and labor amongst the company’s biggest challenges. He also named recycling as a challenge, as old corrugated cardboard (OCC) is down, and the company is in some situations where it has to pay for mixed paper.

Burke also shared that the company plans to remain disciplined on pricing for the year, and that the company’s capital return drivers include market selection, quality of service and management incentives.

Kate Worley of Wal-Mart Stores Inc. discussed the company’s recycling programs, which include OCC, metals and food waste. Wal-Mart has set a goal of diverting at least 90 percent of its waste from landfill or waste-to-energy facilities by 2025, and it currently has a waste diversion rate around 78 percent.

City of New York Department of Sanitation (DSNY) Commissioner Kathryn Garcia shared that DSNY is aiming to reach zero waste by 2030, and to help reach that goal, it’s expanding its residential organics waste collection program.

DSNY currently has more than 70,000 applicants for driver positions, which is partially due to its low turnover rate and higher-than-average pay.

Garcia also provided an update on New York’s commercial franchise zoning system, stating she expects to have an implementation plan ready by summer and an actual franchise system in place in the next five years or so.

Casella Waste Systems CEO John Casella shared that the company has room for growth and improvement and that its recently acquired transfer station is part of its growth opportunity.

He also discussed how the company is handling the challenges brought on by China’s import ban and contamination standard, and how it will utilize the SRA fee, which is similar to a fuel surcharge but for commodity prices, to manage risks.

Bryan Staley of the Environmental Research & Education Foundation (EREF), Darrell Smith of the National Waste & Recycling Association (NWRA), David Biderman of the Solid Waste Association of North America and Mark Reiter of ISRI discussed bridging policy data and member needs.

The industry leaders agreed that U.S. waste and recycling companies are in need of expanded recycling education and that education is needed to reduce contamination, which is one of the industry’s largest challenges.

Republic Services CEO Don Slager, executive vice president and CFO Chuck Serianni, executive vice president and COO John VanderArk and executive vice president and Chief Development Officer Brian Bales discussed what the company is focusing on both now and in the future.

Republic is using more real time data in the area of customer service to avoid pushing price increases to customers that have had recent service interruptions, building upon its reliable fleet and figuring out the best way to manage and combat recycling challenges.

Closing out the investor summit was the CEO panel featuring Burke, Mittelstaedt and Waste Management CEO Jim Fish. The trio touched on labor, safety, technology and recycling.

Fish stressed that sending a large amount of material to a single stream recycling facility that ultimately has to go to a landfill is not recycling because it increases the source diversion rate and actually makes the cost of recycling much higher due to contamination.

Over the last 10 years, contamination rates have nearly doubled. This is partially due to the incentives to get people to put more in the recycle bin even if it’s not recyclable.

The trio discussed some actions that could help remove the industry from the top 10 most dangerous jobs in America list, such as shifting from rear load collection vehicles to automated side loaders and reducing driver distractions.

Technology is entering the industry at a fast pace, and the industry needs to focus on technology that “pulls” customers in versus the act of “pushing” technology out to customers.

During “China’s Import Regulations: Where Do We Stand?” session, Dylan de Thomas of The Recycling Partnership, Mark Reiter of the Institute of Scrap Recycling Industries (ISRI) and Susan Robinson of Waste Management touched on the latest news out of China. Moderated by Anne Germain of NWRA, the session was an opportunity to learn about the impacts of China’s restrictions on exports and whether there might be light at the end of the tunnel. Presenters also advised on what the domestic industry can do now to extract value from materials they must find new homes for.

The U.S. exports 37 million metric tons of scrap worth $17.9 billion, and we need trade as an outlet. This means paying attention to China, as nearly 40 percent of the 800 million metric tons of scrap produced annually go there, said Reiter.

Meanwhile, he said, China is limiting not just trash but valuable commodities, with plans to market its own.

Based on conversations ISRI has had with the Chinese government, he said, “This is China understanding recycling is environmentally friendly. And we will be competing with them to market scrap."

China banned certain mixed paper and postconsumer plastics some time ago, and last week, the country announced that by the end of the year it will ban postindustrial plastics and some nonferrous metals.

Reiter cited the biggest challenges today as meeting the 0.5 contamination threshold, inspection inconsistencies and market competition.

“Different ports inspect differently,” he said. “There is no definition of 0.5 percent, so there are officials in China who are confused.

You’ll be hearing the term “Blue Skies” if you haven’t yet, referring to China’s more stringent inspections and efforts to ensure compliance with the standards.

Reiter believes current conditions with regard to China's expectations will be longer term than what the industry thought last fall, “and we still don’t see an end point.”

Moving forward, he advised industry stakeholders to look for other outlets, particularly India, Southeast Asia, Mexico and Vietnam.

Robinson spoke of who is affected in what way and had ideas for responding.

“Without the China market, we have 13 million tons competing in the same markets, which impacts all our customers and municipalities,” she said. “We will all feel the impact of a supply and demand issue.”

Meanwhile, she said there is a “complete disconnect between demand and what comes in. When demand stops, material keeps coming in, and recyclers are expected to find a place for it. That’s a tough dilemma,” especially since about 25 percent of recovered material is pulled out for contamination, resulting in high processing costs.

“We focus so much on getting material in the cart that our customers think that’s all that recycling is. They think we will find a market for what they put there. I suggest helping them understand what they put in the cart is only part of the story,” said Robinson.

She referenced strong markets for some plastics like high-density polyethylene but said paper is a problem, especially with China’s recent policies. Changing the fact that China’s mills are closing is not an option, but she said improving quality is.

“A couple of our facilities are doing well on inbound marketing and educating consumers,” she stated. “But we have different, extremely costly materials coming in … and increased processing costs to meet new quality specs, and this is what we have to focus on. We need to work collaboratively with all stakeholders we engage with. I encourage local haulers, recyclers and municipalities to work together on solutions.”

de Thomas noted a radical shift in how China would do business with other countries from 2000 to 2014.

“China wanted and paid a premium for our materials. Over time, it was for a lower quality for a higher value,” he said.

The government started pushing back in 2008, when it passed laws that it’s now enforcing.

The Recycling Partnership is working to help communities rebound from repercussions by offering recycling grants, free consulting to help boost recycling and tools to help educate the public.

“China wants larger, cleaner, better regulated facilities and wants to bolster their domestic markets and supply their own solid waste management system,” said de Thomas.

His advice for municipalities and others wanting to gain market traction: “Clean your stream and support market development in your community.”

During the “Rise of the Robots: The Role of Artificial Intelligence in the Waste Industry” session, moderated by Ron McCracken of RJM Associates, Charles Yhap of Clean Robotics, Matanya Horowitz of AMP Robotics, Nathanael Lortie of Eagle Vision and Rich Reardon of Bulk Handling Systems (BHS), discussed how robotics are helping address challenges faced largely by material recovery facilities (MRFs) to improve the quantity and quality of recoverable materials while decreasing processing costs and increasing efficiency.

Along with these insights came exciting industry news, including a partnership between Machinex and AMP to push innovative technology to market, and a product attempting to tackle a surmounting problem: fiber contamination.

Artificial intelligence, or robotics, perform tasks that typically require human intelligence, like speech recognition and decision making. These “robots” do some tasks with more precision and speed than humans, said the presenters, citing several examples and powerful data.

One rapidly advancing area is optical sorting, with robotics identifying materials by shape and logo among features, meaning they can be separated not only by material type but further broken down into other categories.

It has historically been hard for technology to “see” all cartons, all plastics bottles and paper types, said Horowitz. “But now we can teach these systems to identify these materials, showing it thousands of examples. They can identify, for example, PET from other plastics by its shininess. This means we can have one common sensor that can identify a huge spectrum of differing materials and in different operating conditions. It means you can be more specific.”

Beyond sortation benefits, robotics’ capabilities have second-order implications. MRF operators can see how much aluminum is getting lost or notice spikes in paper volume and track and manage pre-emptively. Plus, robotics can adapt to different lines, providing flexibility.

But what we see today is just the beginning, Horowitz told WasteExpo attendees. “As these systems learn more materials, they will get better and better over time.”

Getting the right material in the right place is among the greatest challenges, both at MRFs and even before material gets to the MRF. Yhap pointed out that Americans are 30 percent effective at choosing recycling versus landfilling correctly, contributing to the low average U.S. recycling rate of 20 percent.

He went on to discuss smart waste receptacles that classify, separate and track weight and do it more accurately than people. Yhap anticipates that, in the fairly near future, we will begin seeing this technology type in public places like stadiums and convention centers and even in homes.

The technology he said will help recycling workers with tasks requiring heavy lifting, or any job requiring continually high levels of concentration. “And it will yield better recovery rates for all if not most material types.”

Providing perspective of a company that builds MRFs, Reardon said, “There is a human element in this business and an economic element. And there is data tied to the logistics of moving and selling recycling [that technology assists in capturing].

Speaking of MRFs’ high costs for labor and recruiting, the cost of supervision and of injury, he said, “These problems are ongoing expenses … so the ability to replace those positions with reliable, accurate equipment is important … but to replace the human element, we need a devise that thinks and sees like a human. To be able to see and think this way and have this data is powerful.”

The main feature of BHS’ Max-AI is autonomous quality control. It has been leveraged in plastics, single stream and mixed waste environments. Reardon believes its ability to remove fiber, a major contamination source, will be of value, enabling operators to know what’s going into the bunker prior to baling.

Lortie compared what is happening in the recycling industry to what happened over time with manufacturing, which evolved from mechanical separation to mass production, then automation, and now, he said, “We are going into industry 4.0, where everything is connected and works together. [Comparatively] In the recycling industry, we went from manual to mechanical sorting and then got into optical sorters and then robotics.”

He sees advances in artificial intelligence in recycling niches as a new and better way to deal with packaging.

“Packaging is continually changing, and keeping personnel up is an issue, so automation of optics … is key to getting good separation.”

Artificial intelligence can provide insight to analyze data and be more proactive.

“We can measure volume and steadiness of speed and flow and material changes. We see volume and purity changes in real time and know if we are going to hit a wall or not,” said Lortie.

In a session titled “Managing Costs by Managing Leachate,” Nikki Roy and Ryan Schipper, both from Golder Associates, discussed ways to treat leachate and why it’s important to manage it on the front end rather than later. In this session, moderated by Steve Menoff from CEC, they also spoke at length on PFAS, toxic compounds found at landfills and wastewater treatment plants that state regulators are paying attention to.

Leachate treatment is mostly regulatory driven; increasingly, wastewater treatment plants are seeing tighter discharge limits, impacting what landfills can send them, said Schipper.

He said, for example, wastewater treatment plants are switching to a UV process to disinfect, and UV has to shine through water, which can cause issues involving leachate.

“We don’t want to get to the step where treatment is required,” said Schipper. “Rather you can do a lot to minimize volumes on the front end, like evaluate what waste we are accepting and understand what we take in the landfill can have impact during operations and long after closure.”

He also cited technologies to minimize leachate, such as putting a final cover on faster or using temporary covers and good storm water diversions.

Some common problematic constituents are ammonia, volatile organic compounds (VOCs) and semi VOCs.

PFAS from leachate are especially of concern and hard to deal with.

There aren’t a lot of good treatment options for PFAS, and those that exist are costly. But operators can at least minimize as much as possible by covering cells to reduce concentrations, he said.

Meanwhile, scrutiny of PFAS is on the horizon with regulatory frameworks rolling out day to day, and states are reacting differently, said Roy.

PFAS describe over a thousand manmade chemicals found in many commodities, from dental products to fire-fighting foam, Teflon and car wash products.

“So, if you ask if they are in landfills, the answer is resoundingly yes. These compounds are in leachate, and if you sample for PFAS adjacent to your landfill you will find them there,” she said.

Meanwhile, each state has adopted different levels of regulatory limits for drinking water and ground water and some look at surface water. The number of compounds being regulated varies from state to state, too. So, Roy advises landfill operators to understand each state’s rules.

While many jurisdictions are now looking at PFAS, only a few have strict mandates around them. New Hampshire requires open and closed landfills to test for PFAS in their monitoring well networks around the landfill as well as in residential wells. At its Merrimack Landfill, it found the maximum concentration in residential wells was far above New Hampshire’s drinking water standard and ambient ground water standard.

And the trend is for allowable levels to go down in states that are paying attention, said Roy.