By NEIL HARTNELL
Tribune Business Editor
A BISX-listed waste services provider yesterday confirmed that “crazy” cost increases over the past year had left it with no alternative but to raise customer prices for the first time in over a decade.
Francisco de Cardenas, Bahamas Waste’s managing director, told Tribune Business the company had “eaten” rising expenses for as long as it could but the price increases - which are “more or less” 10 percent for the services impacted, and took effect from New Year’s Day - were “inevitable” and could not be delayed further.
He explained the rationale in a December 28, 2022, letter to clients, stating: “Due to many market factors that have increased the cost of doing business, Bahamas Waste will be implementing a price increase effective January 1, 2023.
“Our last price increase across services was more than a decade ago. Unfortunately, it is proving difficult to continue to absorb the rising costs associated with doing business. Specific pricing will vary by service category by approximately 10 percent. Customers with contracted project rates will be contacted by a Bahamas Waste service manager.”
Mr de Cardenas, speaking to Tribune Business yesterday, said “it was not all services but most” that have been impacted by customer price rises. “As you can imagine, the world is feeling it,” he added of ongoing inflationary pressures. “Fuel, lubricants, parts, labour, shipping, everything has gone crazy.
“We’ve eaten it, and we just felt it was time to make an adjustment. We need to keep providing the excellent service we do. It was just inevitable. I was trying to delay it as much as possible. We’ve been trying our best to control our costs. It’s been a good run, but it’s just been tough.”
The Bahamas Waste chief, affirming that the price increases were “about 10 percent more or less”, said the charges for some services - especially those where clients were more likely to switch to a rival provider - had not moved at all.
Citing residential garbage collection as one example, Mr de Cardenas explained: “There are some services where we just have to be very careful because you might not have too much of a loyal customer base, so you have to be very careful on what you do because people [rivals] are waiting to pounce. We bend over backwards, and try and do what we can. When they say jump, we say: ‘How high’, and do what we can to make them happy.”
He added that Bahama Waste had spoken to most, if not all, its commercial and major clients to explain the price increases and why they were necessary. “There are some that may have slipped through the cracks, but we’ve called most of them,” Mr de Cardenas said. “They’re more than understanding, which is very nice.”
Bahamas Waste’s service price increases further highlight how no sector of the economy is immune from the inflationary pressures that are driving the skyrocketing cost of doing business as well as the cost of living crisis impacting multiple Bahamian middle and lower income families.
The BISX-listed provider’s business is capital intensive given that it is vital to keep its fleet of garbage trucks on the road, thus necessitating ongoing investments in maintenance plus parts and other equipment and machinery. All these involve expenses that have increased markedly, while many of the product inputs it requires are oil-based or oil derivatives.
Thus, even though global oil prices have moderated somewhat to between $75-$79m per barrel, Bahamas Waste has been unable to escape the consequences of last year’s market spikes and volatility. And, as a publicly-traded company, it has a fiduciary responsibility to its shareholders, customers and employees to maintain its margins such that it delivers on profits, services and jobs.
Mr de Cardenas yesterday said the company particularly felt inflation’s impact when Russia invaded Ukraine in February 2022. “We had been all pandemic. We had supply chain issues, but when the war started the price of steel tripled, the price of paint.... it’s settled a bit, but it’s settled high,” he told Tribune Business.
“Now steel has settled but it’s a little bit high. It’s somewhat back to normal, but it’s probably double what it was although maybe not that high. We don’t like playing the fuel surcharge game, as you need a whole other department to manage that. We just had to do something and cover it all.
“It was crazy. I just couldn’t even buy containers. It was ridiculous, and then you had to pay duty and shipping on top of that. During the pandemic I didn’t buy any equipment, and then we had to catch up, but in 2022 the prices were crazy. We had to do it. I’d like to think we’ve been fair and not aggressive, and will do what we can to make everybody happy.”
Mr de Cardenas said no further price increases are being considered, and added: “I think we’ll be good, and hopefully we will be able to manage our costs better internally and the world will calm down a little bit and we will get back to normal or somewhat normal.”
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