Key takeaways
- Three costs stack on top of each other: the equipment, the service, and the resale value of everything you put inside it.
- The third line is usually the largest and is the only one that never appears on an invoice.
- A real Northland 3PL swung from minus $1,213 a month to plus $2,229 with no operational change beyond where boxes were put.
- Count for three consecutive production days before calling anybody. Estimates run about half of reality.
The compactor is the most expensive machine in most warehouses, and almost nobody accounts for it properly. The lease and the pull charges are visible. The material going into it is not, because it left the balance sheet the moment it was unloaded.
The three costs stacked on top of each other
- The equipment: lease or amortisation, power, maintenance, and the floor space it occupies.
- The service: pull charges, haulage, tipping or processing fees, which scale with how often you fill it.
- The material: the resale value of everything you put inside it, which for most industrial sites is the largest of the three and the only one that never appears on an invoice.
That third line is the whole argument. If a site compacts four hundred bulk boxes a month, and those boxes are worth between $1.75 and $5.50 each, the material going into the machine is worth somewhere between $700 and $2,200 — every month, indefinitely.
A real example, with permission
A third-party logistics operation in the Northland, roughly 180,000 square feet, receiving bulk inbound from about forty vendors. Before we were involved:
| Line | Quantity | Cost / value | Net |
|---|---|---|---|
| Compactor pulls | 4 per month | $85 each | −$340 |
| Bulk boxes compacted | ≈ 310 | Worth $3.10 avg | −$961 of value destroyed |
| Pallets removed by hauler | ≈ 90 | $1.10 each to remove | −$99 |
| Cartons baled as OCC | ≈ 2.4 tons | +$78/ton | +$187 |
| Net position | −$1,213 per month |
After: scheduled fortnightly collection, bulk boxes and pallets purchased, cartons sorted rather than baled where single-size lots justified it.
| Line | Quantity | Cost / value | Net |
|---|---|---|---|
| Compactor pulls | 1 per month | $85 | −$85 |
| Bulk boxes purchased by us | ≈ 290 | $3.10 avg | +$899 |
| Pallets purchased | ≈ 85 | $4.20 avg | +$357 |
| Cartons, single-size lots | ≈ 1,900 | $0.52 avg | +$988 |
| Cartons baled as OCC | ≈ 0.9 tons | +$78/ton | +$70 |
| Net position | +$2,229 per month |
A swing of roughly $3,400 a month, on a site that had made no operational change other than putting boxes on pallets instead of into a machine. The labour involved is about twenty minutes a day at the receiving dock.
Nobody had ever asked what was in the compactor. They had asked how often it was emptied, which is a completely different question.
Working out your own number
- Count what goes into the compactor for three consecutive production days. Do not estimate.
- Separate the count into bulk boxes, cartons, pallets and genuine waste.
- Multiply by indicative buying prices — ours are published, and you are welcome to use them as a benchmark with anyone.
- Add your current disposal cost, because avoided cost is as real as revenue.
- Compare. If the number is small, do nothing and enjoy having established that.
The objections, answered honestly
“We do not have the labour.” The sorting is usually already done for you — bulk boxes arrive separately from cartons and both arrive separately from waste. What is needed is a decision about where to put them, not a new process.
“We do not have the space.” Scheduled collection is what solves this. A fortnightly slot needs a pallet position, not a bay. The space problem is created by irregular collection, not by the material.
“It is not worth the hassle for a few hundred dollars.” Possibly true, and if so the audit above will have told you that in five days. But most sites discover the number is several times what they assumed, because bulk boxes are invisible: they arrive full and they leave flat.
Questions