For such a simple commodity, the waste industry can be very confusing at times. Between contract language, invoices, and fluctuating prices, it isn’t always clear exactly what your service level is or what you’re even being charged for.
After reading through this document you will know what to look for when reviewing your existing contract or signing a new one. We will not cover every clause so make sure you read through your entire contract before signing. For this example we have taken a standard contract from a Chicago waste hauler; most contracts will contain language very similar to what you read below.
Let’s get started!
Invoice Line Items:
Base Rate – The rate for emptying your dumpsters. This will increase as dumpster size and number of weekly pick-ups increases. Pick-up frequency effects price more than dumpster size.
Chicago Permitting Fee – The City of Chicago charges a fee for each dumpster you have. Some haulers charge this on a monthly basis, some charge it quarterly.
Fuel Surcharge – The fee haulers charge to offset their fuel costs. Typically this calculation is tied directly to the national average price of diesel fuel as reported weekly by the Energy Information Administration of the U.S. Department of Energy ("EIA/DOE").
Environmental Fee – This fee covers costs and expenses to operate collection, transfer, landfill, recycling, and waste-to-energy operations.
Recycling Offset Fee – The national recycling market has become less profitable recently. This fee is charged to offset the narrow margins that reselling recycled raw material brings in today’s market.
Extra Yardage – This fee is charged when a hauler discovers your dumpster overflowing or has extra bags on the outside of it.
Lock – Haulers charge this fee to customers who require a lock and chain to secure their dumpsters.
Administration Fee – This charge covers the cost of generating paper invoices and processing payments.
Term: The Auto-Renewal or Evergreen Clause
This Agreement…shall extend for an initial term of five (5) years from the date hereof (the “Initial Term”), and …shall be automatically renewed for successive 5 year terms (each a “Renewal Term”) thereafter…
Haulers use this clause to make your contract automatically renew once the original term is up. Pay attention to your contract expiration date. In this case, the standard term is five years! This contract will continue to roll-over for another 5 years unless you submit a cancellation letter according to the contract terms.
- Know your contract expiration date.
Termination: The Cancellation Window
…unless either party shall give written notice of nonrenewal (via certified mail) to the other at least sixty (60) days but not more than one hundred twenty (120) days prior to the expiration of the Initial Term, or any Renewal Term (together, the “Term”).
Most haulers require you to submit your Termination Letter via Certified Mail. You cannot call or email them to submit your notice of termination. You must also submit this letter within the ‘Cancellation Window’. This window is usually 60-90 days long. The window will also begin and end a few months before the contract is up. This example contract gives you 2 months to cancel on a 60 month contract and if you miss this window you are out of luck.
- Based on your expiration date, determine when your cancellation window begins and ends.
- Know the guidelines of how to submit your Termination Letter.
Rate Adjustments: AKA Cost Increases
…may increase service rates to account for any increase in such costs or to account for any increase in transportation costs…. Customer agrees [the hauler] may also increase service rates, without prior notice or consent, to adjust for cost increases or to achieve, among other things, an acceptable operating margin…
Haulers can increase your rate without notifying you directly. If you receive a bill with a rate adjustment on it and pay the new amount, you have effectively agreed to that new rate.
- Don’t pay any rate adjustment immediately. Call your hauler to discuss removing or reducing it.
- If signing a new contract, negotiate maximum rate increases into your contract.
Service Frequency Changes:
Depending on your business type you might need to adjust your frequency of pick-ups or dumpster size based on seasonal demand or a number of other reasons. When you ask your hauler to change your pick-up frequency or dumpster size, most of the time you will be singing a new contract. The clock starts over so be sure to identify everything we have discussed already.