Landfill Volumes and Pricing Evidence the Recovering Economy

Date: November 24, 2020

Source: News Room

Just as the waste in our roll-out carts evidences our behaviors, it also reveals our economic wellbeing. It is even sometimes said that the waste industry is a leading indicator of the economy, rather it is at least an immediate indicator of the economy. A garbage man will tell you the dumpsters are only half-full months before government statistics are available.

Waste Business Journal statistics show that the industry appears to be recovering in line with the gradual reopening of the economy following the seismic shifts caused by COVID-19. Waste volumes flowing into landfills hit their lowest point in April where they were off as much as 20 percent from a year earlier. This is in almost perfect tandem with US monthly Gross Domestic Product (GDP) (see the chart below). As a measure of the value of all goods and services produced, changes in GDP are the most popular indicator of the nation's overall economic health.

Consequently, landfill pricing which had been growing at a steady clip of around 3.5 percent, stalled as companies and municipalities struggled to hang on to business from cash-strapped customers. Over the longer term however, pricing has been strong reflective of a strong pre-COVID economy, decreasing landfill capacity and pricing discipline exercised by the large waste companies. Consider that even with the 0.5 percent month-to-month decline in May, prices were still up 3.3 percent from a year earlier. Prices have held steady at that annual rate since then.

Pricing by region tells a more dramatic story of tightening landfill capacity amid economic growth, especially prior to COVID-19 (see below for a map of the regions). Landfill prices in the Northeast were up double digits year-over-year from March through June until settling down to a 6 percent rate of annual growth. Similarly, in the Pacific states prices have also been averaging double digit year-over-year gains, from March through July before settling down to around 12 percent at present. Pricing in the Midwest and Southeast, which get a lot of waste from the Northeast, track with national average, especially since they collectively represent 60 percent of landfill volume in the US.

While the decline in waste volumes has tracked closely with the economic impacts of COVID, the effects on pricing seem to have lagged a month or two. That is likely due to the time it takes for contractual and other arrangements to change. However, prices already appear to be moving up again, especially as volumes recover. Waste Business Journal now predicts that the national weighted average will again reach $55 per ton by year-end. Prices are expected to continue to climb in the future along with population growth, an improving economy, further industry consolidation and with tightening landfill capacity.

Landfill volume on the other hand, declined rather uniformly among different regions of the country. Beginning in March volumes declined on average 5.9 percent from their levels a year earlier. By April they were off 13.4 percent from a year earlier but by May things already began to improve as volumes were down 10 percent from a year earlier. From that point on volumes steadily improved to the point now where volumes are on par with last year's levels and still improving.

Waste Business Journal conducts research and publishes reports on the waste management industry. Our mission is to provide industry stakeholders with the vital information they need to guide their wise decisions.

Our researchers survey individual waste processing and disposal facilities, waste management companies and government entities. We gather information about the types and volumes of the many types of waste being managed, the prices paid, what kinds of equipment are employed, who owns the facility, who operates it, the market area served, remaining and operating capacity, among many other questions. We compare the data we collect with those collected from other sources such as the various state regulatory agencies, the US EPA, and others to cross check and augment the information.

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