Commercial waste collection is a no-nonsense business. The hours are long, the competition is fierce and operating overhead can quickly eat up a company’s profits. Under these relentless market conditions, Leck Waste Services, a regional refuse company from Ivyland, Pennsylvania, has managed to stay in operation since 1972—no small feat for a family-owned and operated business.
Beginning as a single pick-up truck operation, the company has survived economic downturns and competition from large national corporations for 47 years by providing personalized customer service and maintaining a forward-thinking approach to its operations.
Now with 52 trucks and 65 employees, Leck Waste Services President and Owner Jason Leck says the company is continuing its work to stand out in its market by pushing for innovation.
Decreasing profit margins
Several years ago, Leck realized the inability to get accurate weight readings consistently on the company’s front end loading trucks was costing the company revenue, but he had no way of knowing how much.
“We had thought that [we were missing out on revenue] for about two years, and we were really starting to see profitability margins decrease in our front load division. We knew that we needed to get more accurate data from each customer,” he says.
While Leck’s pricing models seemed correct, the company leaders were at a loss trying to pinpoint why revenues were dropping.
“As a whole, we looked at route profitability, not individual customer profitability,” Leck says. “We knew we had very good pricing in place, but we didn’t understand why we were not hitting our forecasted numbers.”
Knowing the numbers
After deliberating on the issue, Leck says the team finally came to the conclusion that they must be hauling compacted waste at uncompacted prices.
“Ultimately, if you are pricing uncompacted waste to be collected from your customer, but you end up with compacted or heavier-than-expected waste, you can never be profitable,” Leck says.
The company decided to test this theory by installing digital scales on its front loaders and periodically auditing the weights of its customers’ dumpsters in real time. Finding durable, accurate scales proved a challenge, however.
“We tried two different competitors’ products but were experiencing inaccurate weights,” Leck says. “This was mostly because the scale load cells had to be installed between the body of the truck and the frame rails of the truck chassis.”
Leck says this installation location caused frequent and costly maintenance repairs for the company.
“Road conditions were destroying the load cells faster than we could replace them because of the constant slamming of the truck body against them,” he says. “[Also, operating in the Northeast], road salt and brine were destroying the electrical connections.
“The waste industry is an extreme-duty application [for equipment], and these products were built more for straight haulers versus for a vocational application like waste and recycling services.”
Finding the right fit
After trying various scales without success, Leck found the solution he’d been looking for after attending an industry trade show and seeing the solutions offered by Eugene, Oregon-based Air-Weigh.
“I first heard about Air-Weigh at the 2015 WasteExpo. I spoke with Jack Ewing [Air-Weigh’s East Coast refuse sales manager] about their design for front load garbage trucks. I was interested because it was not a fork-based application and it was not an under-body load cell mount design. The fact that they applied the weighing sensor to the arms of the front load truck really interested me.”
According to Ewing, Air-Weigh’s BinMaxx scale system is designed so that it isn’t subject to the same on-the-job stresses as other front load scale systems, which yields greater durability and more reliable performance.
“[The] arm-mounted design has significant durability advantages over other scales because it avoids the car-wreck-100-times-a-day damage that hinders some fork-mounted products,” he says.
Convinced it was time for a change, Leck Waste decided to run a pilot program with six BinMaxx scales to see if the company could get more reliable dumpster weight data, reduce its scale maintenance issues and put an end to the guessing game regarding customers’ waste weights.
A winning solution
According to Ewing, being able to mine consistent and reliable data from a company’s hauler trucks is the cornerstone for setting appropriate pricing.
“Density is the issue,” Ewing says. “Getting an average of the content container weight for each customer over time is the only way to know what you are actually hauling, which is the only way to optimize profitability by account.”
According to Leck, it’s this functionality that allowed the company to see significant results right off the bat.
“In the first month of use, we identified approximately $30,000 in lost revenue from underpriced accounts that we were servicing on a monthly basis,” he says.
“We were able to renegotiate those accounts over the following five months and realize a $10,000 profit,” he continues. “While we were not able to keep every single customer, we were able to realize over $260,000 in annual operational income from the weight audits.”
While the financial results were significant, Leck says that the training requirements for the new implementation were not. When asked about how much time it took to train his drivers, Leck says, “I would say, in total, it was roughly two hours per driver over a two-month period.”
This easy adoption derives, in part, from the product’s design. The scales have been designed to automatically record weights during tipping. This information can then be transferred seamlessly for back-office reporting.
While the way the data is transmitted depends on the fleet vehicle in question and the technology systems in place, Leck says the recorded weights from his company’s trucks are transmitted from the scales through both the Air-Weigh system and the vehicle’s SAE J1939 into the company’s onboard fleet management software from Katy, Texas-based 3rd Eye. Leck says this data is also transferred via Bluetooth to the Soft-Pak tablets each vehicle is equipped with, which can then be analyzed by fleet managers back at the office.
This integration made adoption easy for the company. However, for the training that was needed, Leck notes that Air-Weigh provided the resources to help smooth the transition.
“I think getting [our team] to understand the importance of proper calibration was the most challenging issue we tackled. But, Air-Weigh worked with us, providing the training documents we needed to get the drivers and technicians [up to speed],” he says.
A new approach
Following the successful pilot program, Leck Waste implemented the BinMaxx scales in all of its front loaders. The result, he says, has been transformational.
“It has revolutionized the way we look at customer retention and acquisition,” he says. “If at any point, more than one-third of a monthly customer invoice is going to pay for the disposal costs of the material you collected from that customer, then you start to be unprofitable. And, if your disposal costs are more than one-half your monthly billed invoice to your customer, then you may as well park your trucks and mail them a monthly check because that is exactly what you are doing—paying them to pick up their waste.”
Beyond the advantages it has given his own company, Leck believes the waste and recycling industry as a whole could see similar results through the implementation of this front load scale technology.
“The waste industry is stuck in an archaic pricing methodology,” he says. “The industry seems to think that they can give customers pricing by the cubic yard, but they then dispose of what they collect from that customer on a per-pound or per-ton basis. I have heard so many salespeople say, ‘It’s a light account, we can do it cheap!’”
Summing up Leck’s new analytics-driven approach, he concluded, “My reply now is, ‘Give me the data.’ You cannot manage what you cannot measure.”