Struggling Recycling Industry Tested by COVID-19

Date: December 5, 2020

Source: News Room

Since the beginning of the Covid-19 pandemic, waste management firms have faced significant challenges to their existing business models. Among those, smaller recycling facilities have fared the worst. This is due in part to the realities of how Covid-19 spreads rapidly and in part to a downward trend in demand for recycled plastic, both in the US and abroad. As more facilities close, the ones that remain open are often flooded with customers, which along with changes in the makeup of waste through the pandemic, has presented the remaining open facilities with new challenges.

As large commercial properties shuttered and people spent more time at home, the composition of waste entering facilities has changed. Single use plastics have surged due to large increases in food delivery and PPE use. This might lead one to believe that recycling has increased, however, commercial waste production has simultaneously fallen about 15 percent, which has led to a decline in recyclable materials collected overall.

It is a double whammy for commercial haulers who suffer the loss of weight-based pricing from the decline in commercial volumes while suffering higher disposal costs from the 15-20 percent increases in residential volume - whose pricing contracts are generally fixed.

Since 2018, when demand in Asia for US exports of recyclable materials fell, recycling facilities have faced a tougher market. Over the course of 2020, the price of virgin plastic has fallen by more than half, effectively pricing recycled plastic out of the market. This trend, coupled with outbreaks within facilities, has made it difficult for many firms to stay open. Even though many of the larger waste management companies have been able to survive the pandemic, the loss of many smaller redemption facilities is without a doubt impacting the communities that rely on them. If firms and governments do not adjust policies soon, then both commercial and residential areas could face higher waste management costs down the line.

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