The waste wood industry is a highly competitive market across the UK, so larger national recyclers and those who operate biomass plants have much control over the market and typically have supply direct from the site.
Where can brokers come as a benefit?
Brokers can be a benefit by carrying out all of the leg work on behalf of biomass suppliers and the end user, in return for a small fee. The main focus is to ensure that the supplier gets a fair price on the material they produce and it is in-line with market rates.
A brokers focus is managing the relationship with waste wood providers throughout the UK and ensuring they provide a good level of service to meet the needs of their customers and suppliers. On average brokers will take a fee out of the collection, due to the volume of work they offer they are able to either get a discount for themselves on the product or it goes over the top.
Advantages and disadvantages of using a broker
For a waste management company, brokers can offer a reasonable increase in work, and although the price for the work will be under your own charges, the increase of reliable work can be a benefit. A broker can introduce increased supply of incoming waste wood which sees revenue from gate fees, with a higher revenue from offtake.
There is a danger on becoming too reliant on brokerage work, especially as the margins are smaller, and if the broker loses contracts or starts using a different provider, it can suddenly impact on cash flow, affecting the stability of your business. A balance between brokered work and private can work well in partnership.
Is there a business for waste wood brokers?
With competition so fierce for unprocessed waste wood and for waste wood chip for biomass, brokers are increasingly seeing margins eroded. Suppliers often prefer to deal direct with the end user to ensure they are maximising their own profits, despite the possibility that the increased rate the broker introduces them to may never have come their way in the first place. This is where strong relationships with suppliers and end users come into force