Hector Chavez, public works director for Eagle Pass, TX, had a problem when the city declined a renewal of its current waste collection contract. He had no trucks, no drivers, no maintenance department, and no budget for capital expenditures. However, none of those problems would stop the city’s residents from putting their garbage out for collection. And they didn’t stop Chavez from finding a solution that’s gaining in popularity with municipal waste managers; renting garbage trucks.
Renting is a relatively new development for municipalities. What are the liabilities and restrictions? Who takes the risk when a truck breaks down? And how can it make financial sense when the city has to return a truck with nothing to show for it but a canceled check?
For the city council of Eagle Pass, a cancelled check was more appealing than huge rate increases. According to Chavez, the city’s contract with Waste Management was expiring and the company had proposed to increase fees for the twice-weekly residential collection from $8.58 to $15.47, plus elderly and disabled fees would increase from $7.31 to $13.15. “I can see it from the contractor’s side,” admits Chavez. “We don’t have a Type-1 landfill, so they had to transport the waste from Eagle Pass to San Antonio, which is 140 miles away. That’s a huge expense. The fuel was a big issue, and they did approach our city council on two occasions but were turned down because the contract gave the council that option.”
Administrators from Eagle Pass instructed the Public Works Department to take over operations starting on July 4, 2007. Chavez had hoped to buy Waste Management’s equipment, but negotiations stalled. With the city in an urgent situation, Chavez hit the Internet and found Tampa Bay, FL–based Big Truck Rental.
“Their biggest selling point was that they had a huge inventory that could be delivered from a number of states, so they could get us trucks quickly,” says Chavez. “Other companies need 60 to 90 days.” Eagle Pass opted for an initial three-month rental of six rear-loader garbage trucks and two rolloff container trucks.
According to Mike Miller, vice president of sales and marketing at Big Truck Rental, the time crunch required his company to deliver trucks from Pennsylvania, Georgia, Ohio, Florida, and Texas. “These vehicles were driven [for delivery], and we had less than a week from the time the contract was approved to get them all to Eagle Pass,” Miller recalls. It was tough, but Miller says accessibility is the reason the company keeps trucks in the abovementioned states and additional inventory in Colorado and California.
Plugging the Gap Between Orders and Deliveries
Circumstances were a little easier for the City of Fayetteville, NC. Solid Waste Director Gerry Dietzen says the city’s first experience with truck rentals occurred in 2005, when an annexation created additional territory for waste collection. More recently, it was equipment failure that caused Dietzen to seek six reserve trucks. “Our equipment was getting a bit old,” Dietzen explains. “We run about 30 trucks, and it was not uncommon for 12 to 15 of them to be out of service every day. We were struggling just to get our daily collection done and often spent additional days trying to catch up.”
Fayetteville had new trucks on order, but there was a nine-month wait before all the new trucks arrived. The new trucks were trickling in, so Dietzen implemented a stopgap measure. “We rented trucks, and every time we received a new truck on order we would turn in a rental,” recalls Dietzen. “It’s very flexible, and that was helpful. The company we worked with was very good. We signed an agreement that we would need six trucks for six months, but we kept two a total of nine months and returned one or two before.”
Such flexibility is the result of recent developments in the industry, according to Scott Dols, president of Big Truck Rental. “Essentially the whole world is smaller,” notes Dols. “It used to be hard for people to imagine a truck coming from Florida and going to New York, where they could use it for one month during the fall season. The whole process is much smoother now, and we are able to move trucks around the country using different freight companies and other methods.” Simplified contracts offer another advantage. Dols recalls a time when contracts required countless pages of legal fine print. “Today it’s much easier from a paperwork standpoint,” Dols adds.
Rick Sykes, fleet superintendent for the city of Santa Monica, CA, agrees. He says renting was a simple solution when the city had a disaster involving a fire that destroyed five of the fleet’s 30 trucks. Sykes was able to borrow some trucks slated for the scrap yard by the City of Los Angeles, but that still left Santa Monica with a need for a front-loader.
“All in all the equipment looked to be brand new when we received it,” says Sykes, “and we had no problems. It was a quick and smooth process.” Santa Monica kept the truck for 10 months. “The rental fee was reasonable considering that those are expensive pieces of equipment and expensive to operate,” Sykes adds. It’s nice that there’s something available. We went and looked at old used stuff, thinking we could buy something like that and operate it. But everything we could find did not look reliable enough, and it looked like we’d be buying a problem and doing a lot of maintenance for something that would not be on the road that much.”
Rantoul Truck Center is based in Rantoul, Illinois, with access from Chicago, St. Louis, or Indianapolis. According to Lydia Bower, rental coordinator, the company boasts one of the largest inventories of new or used garbage and grapple trucks, with roll-offs, rear loaders, front loaders available for long or short term rental, with special rates available for most truck rental budgets.
“I’ve seen a lot of changes in the industry since I started,” says Bowen. “Lots of customers are going more for rentals and the long-term leases. It’s probably because they don’t have to worry about the upkeep and the major repairs, because the rental company takes care of those. Then, too, we hear from a lot of customers that want to try out the newest truck, but they don’t want to lay out $130,000, so they’ll rent it for a couple of months and see how it fits.”
Although the company is just about two hours south of Chicago, rental customers reach as far away as the West Coast, so fast delivery is important. Upon order approval, it typically takes one to two days to prepare trucks for rental. “We can have them onsite within two to three days and sometimes even the same day, depending on the distance,” says Bower. “We have drivers standing by, and they will drive all night, if necessary.”
Generally, Rantoul’s customers have an emergency when they need to rent a truck. Breakdowns are common, and customers have called because their trucks caught fire from combustible items coming in contact with heat and decomposing organic refuse. Bower says they haven’t tracked any seasonal patterns for rentals, but there were many calls after Katrina, and Rantoul has rented many trucks in the aftermath of the hurricane.
“This is definitely a growth segment of the market, and since I’ve been here, the past three years, rentals have risen about 50%,” says Bower. More information on Rantoul is available at www.rantoultrucksales.com.
Renting Solves Emissions Standards Compliance
Keeping trucks on the road was a major consideration for Gary Middleton, division manager of collections at the department of sanitation for Dallas, TX. In November 2006, Middleton was notified that he had less than 90 days to add 23 garbage trucks to his fleet to cover the city’s new “Too Good To Throw Away” recycling program.
“We knew there wouldn’t be enough time to go through a bid process to purchase the trucks,” says Middleton. “The bid process usually takes about 240 days on a purchase like that. But some money was appropriated to rent them.” Finding a rental company was a relief for Middleton, but he remained skeptical because the deal looked almost too good to be true.
“We were worried that Big Truck’s sales people were promising trucks that they could not deliver,” Middleton recalls. “We would check on the status almost daily because the trucks were purchased and shipped to another state where the bodies were installed and then sent to Dallas. Of course, we had the Thanksgiving and Christmas holidays to deal with, but the last of the trucks did roll in by the first of January.”
Middleton’s situation is unique in the garbage truck rental industry for two reasons. First, renting a large fleet of 23 trucks isn’t typical. Neither is it typical to keep them as long as two years. “Purchasing 23 trucks is an awfully big load on a general fund,” Middleton explains. “There’s a [financial] benefit to renting, and we also get through the 2007 emissions standards. Now we can think about ‘green machines’ and alternative fuels. We will probably replace these trucks with natural gas.”
Dealing with emission standards by renting is becoming more common, according to Dols. He observes that with the latest emission standards for diesel engines plus another round coming in 2010, many in the industry have trouble planning at the municipality level. Moreover, there are the uncertainties that come with new technologies.
“We just put 12 trucks into a new startup location in Jacksonville, FL, because the chassis aren’t working properly and the computerized engines are having trouble with the monitors and emissions,” Dols says. “It’s a perfect opportunity for the rental business.”
Simplifying the Process
Based in Tampa, FL, RDK Truck Sales offers new and used refuse equipment rentals, rolloff trucks, front-loaders, side-loaders, trash trucks, rear-loaders, recycling trucks, rolloffs, and grapple trucks, as well as container delivery trucks and specialty vehicles for the solid waste collection and hauling industry. Both new and used equipment is available by the day, week, month, year, or longer. The company features late model fleets of 2003, 2004, and 2005 trucks delivered from its Florida and Texas locations.
According to the corporate office, applying for the garbage truck rental program is quick and easy, with forms available online at www.rdk.com. Current rates listed for some typical equipment with 30-day rental include: rolloff trucks ($5,900–$4,500), front-loaders ($6,400–$5,000), side-loaders ($5,900–$4,500), and rear-loaders ($5,900–$4,500). Security fees plus round-trip delivery and freight charges are required up front. There is an insurance requirement of $1 million in liability and physical damage coverage on the rental equipment.
Municipalities are expected to provide regular daily service as suggested by the equipment’s manufacturer. Typical services include: fluid changes, tire maintenance, and the company applies extra fees if the truck isn’t returned clean and fueled.
Leasing is also an option, and RDK says the benefits are financial flexibility, with payment schedules structured to fit the needs of the lessee. Terms extend up to 5 years, with graduated payments, turn-in, and short-term leases that can be incorporated into a program.
Testing New Technology
Many municipalities want to run a pilot program when they change from the old-style trucks to an automated side-loader. Before they make that financial commitment, they want to test it out to make sure it’s really the way they want to go. According to Miller, manufacturers will typically demonstrate a truck for a day or two or maybe a week, but that’s not a true test of the economic or functional feasibility of the equipment. “So cities choose to rent for a month or longer, and that can give them a much better feel for how effective the new technology will be for them,” says Miller. “One truck costing $200,000 is a very middle-of-the-road number, but then there are the parts that go with it, such as the receptacles at about $60 bucks apiece.”
With budget pressures and emissions standards plus seasonal demands, it’s no surprise that the rental industry is growing. And, yes, it is much easier today to get the trucks rolling, but those with experience have advice for their fellow managers.
Start with a flexible rental schedule. “We wrote the rental contract for three months with an option to continue,” Chavez says. “We still don’t have our request for proposal together, so we’re going to need another two- to three-month extension. I advise directors to leave the door open on rental contracts. If you tell the company it’s going to be rented for three months and somebody else wants those trucks, the rental company could commit and you will be without equipment should you need it for a longer period.”
Make sure the equipment is reliable and coming from a company that can support its products, advises Mike Miller. At Big Truck Rental, the policy for inventory is to keep equipment to a maximum age of 18 months. If there is a problem, what are the rental company’s policies and resources? In the case of Eagle Pass, the process worked smoothly, even when their trucks needed attention. “We had to have two trucks replaced, and you can expect mechanical problems,” says Chavez.
No matter where the trucks came from, Gerry Dietzen advises managers to include a margin of two weeks, because the trucks have to be processed.
“You should look them over really well and make sure that you received what was in the contract,” says Dietzen. “I would recommend that you get pictures and document how the truck looks and if it’s in good repair when you receive it.” Finally, there’s the question of staffing.
Because Eagle Pass ended its outsourcing contract, it had to hire new employees. Fortunately, the same drivers that had worked for Waste Management were available. “The drivers were glad to come to the city, and I think our benefits are a little better,” says Chavez. “Getting them was the key. “If we had to go into it without knowing the routes and having drivers unfamiliar with the situation it would have created a lot of problems.”
No matter the situation, planning ahead and getting bids early can help avoid problems down the line. “Don’t wait until the last minute to start working on your contract,” Chavez adds. “And get as many proposals as possible so you encourage competition.”
City managers can expect the competition to grow, because today there’s more information and awareness about rentals. “Right back into the mid-’70s it was unheard of to even find a used garbage truck, because nobody sold them,” notes Dols. “But now the used refuge industry is probably a $250 million industry. So there’s a lot more vehicles and private haulers out there. Even small municipalities that can’t afford to buy a new $250,000 truck are turning toward rentals as part of the answer.”