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Recycling Programs at Large Retailers Contribute to the Bottom Line

Recycling Programs at Large Retailers Contribute to the Bottom Line
“A well-known global clothing retailer saved over 50% of their waste removal costs by removing cardboard (OCC) from the waste stream and generating revenue from recycling.” Procurement Investor

“Grocery stores alone recycled 6 million tons of old corrugated boxes each year.” GreenSource

“In 2009 alone, Walmart redirected from landfills more than . . . 4.6 billion—yes, billion—pounds [2.3 million tons] of cardboard.” GreenBiz.com

Just how much is all that OCC (Recycling Programs) worth? Forest2Market has been collecting data from a wide range of participants in the OCC supply chain since April 2011. During that time, volume weighted average spot or open market prices for OCC have ranged from $82.87 per ton to $181.99 per ton. We began collecting data for OCC moving under contract in October of 2011. Since that time, contract prices for OCC have ranged from $81.66 per ton to $168.05 per ton.

While these numbers make it clear that price volatility can have a significant impact on the total value of an OCC recycling program, we can get some insight into an average value if we take the simple average price of the monthly volume weighted average prices since we began collecting data. For open market purchases the average has been $127.92 per ton; for OCC moving under contract, that average has been $118.39 per ton.

Because retailers need to balance the risk of not being able to move OCC from the back of the store and the price risk, a mix of contract and open market sales is generally advised. Let’s look at the value of the OCC mentioned in the examples at the beginning of this post with a 50% open market and 50% contract mix and the average price.

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While there are costs to recycling OCC—buying or leasing a baler, freight or hauling costs and overhead, even when these costs have been paid for, an efficient recycling program can reduce the cost of sending waste in landfills and add incremental revenue that is reflected in the retailer’s income statement. Moveover, by instituting recycling and other sustainability programs, retailers can rack up good will with consumers that positively impact revenue growth for years to come.