Hazardous waste transportation is a competitive paradox


February 25, 1991|By Grant Ferrier

Profit margins can be skinny, costs steep, paperwork a headache and liabilities hair-raising. Yet the highly fragmented and volatile market for hazardous waste transportation has attracted players of all sizes and from at least four industries.

Those determined to stay in business for the long haul are pursuing a variety of strategies to compete for the 10 million tons of hazardous waste shipped off site each year. Some will have a harder road to travel than others.

Perhaps the biggest challenges face commercial carriers, the myriad transportation companies that have either chosen to haul hazardous waste exclusively or more often as an adjunct to other freight. Some have decided that trucking alone is not enough to build business and offer related environmental services such as obtaining government permits, waste brokering and waste analysis.

The toughest job carriers face, however, is to compete with the major disposal companies. Paradoxically, they also depend on these companies for survival.

Forty percent of waste bound for Rollins Environmental Services' hazardous waste disposal facilities, for example, is hauled by "independents." Forging good relations with the "majors" is obviously an important strategy. The question is, how aggressively will the waste disposal companies expand their captive fleets to replace outside carriers?

In the chemical industry, producers, distributors and transporters have discovered that hazardous waste collection is a close cousin of hazardous materials distribution and a business worth getting acquainted with. The family resemblances are strong enough to give companies like Ashland Chemical and Chemical Leaman a natural inclination for the work, but they've discovered that hazardous waste transportation has its own complexities, and capital investment can be substantial.

Railroads are also in on the act. Hazardous waste collection has its roots in municipal waste management and has traditionally been dominated by road transport. However, over the past three years, railroads have been making serious excursions into the hazardous waste transportation business. Their pitch? Safety and economy, especially for long hauls.

In spite of the competition for transportation dollars, the major players in hazardous waste hauling can be found in the ranks of the disposal industry.

Chemical Waste Management Inc. dispatches 1,500 tractors, trailers and straightbacks from its 23 regional transportation "centers," giving it the largest captive fleet in the business. Revenues for the company's transportation operations typically run 9 to 10 percent of the company total, and the division is keeping pace with the overall 25 percent growth rate, says David L. McEwan, Chem Waste's vice president for sales and marketing. Recent four-quarter sales for Chem Waste surpassed the $1 billion mark for the first time.

The company declines to divulge the amount of waste hauled to its facilities by independent carriers but plans to continue to expand and upgrade its proprietary fleet. "I suspect an increasing amount of waste we manage will be hauled by our own trucks, but we can't see a time when we wouldn't be using outside transporters," McEwan says.

Chem Waste customers base their waste collection and disposal decisions on the desire for safety before the desire for economy, say company executives. "We're certainly not the low-cost carrier and have no intention of trying to achieve that goal. . . . We're more interested in being the 'risk-free' carrier," McEwan says.

A company whose business strategy was directly influenced by Chem Waste's boosting its fleet size in the early '80s is Osco Inc. of Nashville, Tenn. Osco began in 1974 as a commercial carrier of used oil and did a significant share of subcontracting for Chem Waste. "Every month the number of miles traveled by Osco trucks dropped off," says Vice President Steven Blume, recalling how business was affected by the growth of fleets owned by waste disposal companies.

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