City Moves to Zones for Commercial Waste: Key Background

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Commercial waste haulers at work late one night in May 2015.

Adi Talwar

Commercial waste haulers at work late one night in May 2015.

The private carting industry was cautious Wednesday in responding to word that the de Blasio administration plans to introduce a zoned system for the commercial garbage industry, which environmentalists and labor advocates have targeted.

City sanitation trucks don’t pick up waste from stores, so store-owners have to hire private firms to do it. That means the stores on a particular block could all use different companies, and that different companies might serve stores all over the city. The result is a lot of truck traffic, with all the noise, pollution and safety concerns that brings. Defenders of the system stress that it fosters price competition.

A study commissioned by the Sanitation Department and released this week found that a zoned system, in which companies would bid for all the commercial pick-ups in a particular area, would significantly reduce traffic and pollution.

The New York City Chapter of the National Waste & Recycling Association greeted the news cautiously. “Shifting to a district-based system of commercial waste services would constitute a major change with a multitude of impacts – both known and unknown; the next phase of discussions must give due consideration to alternate paths to achieve mutual goals, as well as carefully assess the trade-offs between various options,” the group said in a statement. “New York City is well-served by a robust and competitive marketplace that already is substantially consolidated and efficient, with customer choice the keystone of that system.”

The DSNY study indicated that the impact of zoning on price was hard to gauge. Depending on the effect of the zones on carters’ operating margins, the study modeled prices rising as much as 10 percent, or falling 2 percent:

Should a franchising agreement include provisions or requirements that increase the operational costs for private carters, these expenses may be passed on to customers in order for the carters to achieve the operating margins established previously. Examples of such requirements may include prevailing wage standards, facility or fleet requirements, diversion targets, infrastructure investment, or safety-related measures. …

However, a zone system could also generate cost savings for carters as a result of improvements to collection efficiency, including reductions in truck maintenance, fuel consumption, and overtime costs. Additionally, the guaranteed customer base would remove the revenue volatility risk that currently faces private carters.

Effects on employment in the industry were also hard to predict, the study found.

Reporter Cole Rosengren explored the issues surrounding commercial waste as part of our 2015 series on New York’s Trash Challenge. Check it out here.