Ned Coletta: Yes. So, New York City completed the waste zones and made the awards. And as you correctly point out, we do not directly participate in New York City. We have historically had some customers that transfer waste out of New York City to our landfills in upstate. And we continue to have some great customers in that market. We didn’t enter — it’s not a market. It’s a real focus for us. However, we will continue to work with some of the transfer stations that have won awards, and there may be some opportunity to rail waste to McKeen. Those awards were for 10 years with 10-year renewals at the discretion of New York City. And we do have one of the closest sites to the city with a lot of capacity. So it is a great opportunity for us.
John Casella: I would only add, Tyler, when you look at that, I think 14 of the 20 franchises were awarded to interstate — action interstate. And they have their own facilities and they’re rail served. So it’s very likely that a very large portion of that waste will go to their facilities. I think we will be — we will have an opportunity as an alternative in terms of the overall disposal capacity in the city. And certainly, there are transfer stations that we’re working with right now that will be able to continue into the future. But again, got to keep in mind that a good portion of that franchise waste is with interstate.
Tyler Brown: Yes, very interesting. My last one, it’s kind of in the same vein. And you talked about it a little bit on the first question, but it does feel like rail capacity continues to ramp in the Northeast. Are you seeing any measurable impact on disposal pricing broadly?
Ned Coletta: Yes. Well, one of the things we’ve seen, I mentioned this with the one construction and demo debris site that’s reaching end of life in Long Island, and also with some of the ramp-up in rail activity in the Northeast. It kind of ebbs and flows, right? So a site comes offline in the Northeast, there’s a capacity crunch. Then some new capacity comes through, rail or other alternatives. You see a little bit of a tailing off of volumes, but frankly, that really hasn’t impacted our view on pricing or maybe even other market participants because of the inflationary backdrop and just some of the complexity around new and emerging regulations and costs at site. So you see that a little bit with the volumes, as we said, with construction and demo right now. But it doesn’t change our outlook on how we’re going to run these sites for the long-term returns. We have to be laser-focused on 10-year returns at these sites.
Tyler Brown: No. Okay, perfect. Thank you guys so much for the time.
Ned Coletta: Thanks, Tyler.
John Casella: Thanks, Tyler.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Michael E. Hoffman from Stifel. Your line is open.
Michael Hoffman: Hey, gang. How are you doing up there?
John Casella: Good, Michael. How are you?
Michael Hoffman: Can’t complain. Although we’re going to get the snowstorm that you were supposedly going to get now, which could you take it?
John Casella: No. That’s not good. We’re much more prepared to take that snow than you are down there for sure.
Michael Hoffman: So if we could dig into — I’d like to talk about volume from a perspective of good volume versus bad volume and purposeful shedding. And good volume to me is MSW, small container business, large container permanent versus bad volume is low quality margins. How do you frame your outlook about those trends? Because I think that’s a better story than we might be negative volume in the aggregate.
Ned Coletta: Yes. That’s a great point, Michael. I mean, we didn’t get too much into the lease and Brad mentioned it where if you look at our volume decline in the fourth quarter, it really was highlighted in two areas, construction and demo debris at the landfills that we just discussed. And then on the hauling side, it was a little bit of roll-off on the C&D side and a little bit of residential work. And when we look at that, it was some of our lower margin work, especially on the residential side, we’ve been laser-focused on making sure we have the right customers, right price. Labor has been a challenge the last couple of years, truck availability. So we’re really focused on making sure we get the right return on each stock we have.
So some of its purposeful shedding. We’re trying to get customer segments up to a certain margin point, and we’re not willing to accept lower than that. On the construction and demo side, probably a little bit of slowing into the fourth quarter. We always see that, I think in the Northeast a little bit more slowing there than maybe some other parts of the country. Starting out 2024 in a pretty solid area in that regard, nothing with further sequential declines.
Michael Hoffman: Okay. So the other part of volume and tying it to Tyler’s rail commentary. Two big competitors on the collection side moved a lot of volume out of the market away from the burners in the fourth quarter. And there was a temporary impact to spot prices as the burners scrambled to fill, because their — basically their volume is an airplane seat. If they don’t get it, they can’t backfill it? What is the state of the spot market today? My impression, our surveys say the spot markets recovered that they figured this out even in the seasonally week period. And that’s another statement about the quality of underlying unit pricing in the disposal market, regardless of volumes.
