Auto Recycling World had the privilege of engaging in an insightful conversation with Jarret Hann, the Executive Director at Team PRP, based in the US. This discussion shed light on the pivotal role of trading groups in the automotive recycling industry and their profound impact on enhancing efficiency, meeting customer demands, and fostering growth within this evolving sector.
Understanding Trading Groups in Automotive Recycling
Trading groups do many things, but the primary value is improving the chances of fulfilling every customer order that comes in. That is the ability to “say yes” to every order, regardless of whether the part is in inventory.
Depending on the size of a recycler’s in-stock inventory, there’s only a chance they will have the part in stock and is available. In our experience, even a large inventory facility can expect to fulfill about 15% of incoming orders (with their in-stock inventory).
As a part of Team PRP’s trading group, recyclers have visibility to the entire group’s inventory via software and a network of trucks and warehouses. Recyclers can fulfill orders without the end customer realizing that the part is sourced from outside their existing in-stock inventory. The benefit is two-fold, (1) in that both buying and selling recyclers grow their business and their bottom line, and (2) sellers can better serve new and existing customers.
Benefits for Auto Recyclers
The ability to say “yes” to every sale. When you say “Yes, we have the part” in every instance, it builds stronger relationships with customers and helps grow business revenue and new selling opportunities.
Team PRP also allows independently-owned recyclers a better opportunity to compete with the more prominent recyclers in the US or companies in the UK that have multiple locations and are effectively their own inter-company trading group.
Considerations for Recyclers
Team PRP is the largest trading group of recyclers in the world, with almost 300 facilities in 41 states and shipping over 80,000 parts per month through our 19 warehouses. We are a group of Professional Recycling Partners shipping Premium Recycled Parts. We take words like “Professional, Partners, and Premium” very seriously. So, determining whether a trading group like Team PRP is right for your facility really depends on whether you’re willing to meet the expectations for quality and dependability of our group.
Challenges and Growth Opportunities
We have a proof of concept with recyclers in the US, meaning, so the message on the value of brokering parts is out. If you’re not brokering parts, you’re leaving money on the table. So, the challenges we typically hear are that “we’ll need to hire extra people” and “we’re not going to be ready for the increase in our volumes”. Brokered parts revenues account for between 30 and 40% of overall revenues for our top-performing facilities; the challenges are far and away good ones for a recycler’s business.
Evaluating Joining a Trading Group
Come to an industry conference, talk to recyclers who are already in a network, or join URG or ARA. I’m biased, but as this industry goes through another round of private equity-funded consolidation, independent recyclers should look for every opportunity to stay competitive and grow their bottom line. Brokering parts with trusted partners should be a strategic opportunity recyclers make full use of to ensure long-term success.
Impact of Mergers on Trading Groups
Team PRP acquired the Midwest Runner network in the spring of 2023. In the lead-up to that, both our networks were growing, and there was significant overlap in the services provided, which was causing obvious inefficiencies. In addition to being a successful provider of transportation services, Karl Milliron (Midwest owner/founder) owns a recycling facility and has always had the industry’s best interest in mind. At the end of the day, we both knew that recyclers just wanted to ship parts and grow their businesses; the network they did it on was a secondary consideration. We shared a common view that bringing everything under one big network would better serve the individual recycler and the industry as a whole.
Merger Benefits for Recyclers
There are a lot. The most obvious one is growing trading routes and regions and other things related to economies of scale. Prior to the merger, it wasn’t cost-effective for either network to set up and staff a warehouse in Pennsylvania, for example, because the volume of freight couldn’t offset the costs. Now, with all our facilities under one banner, we have that volume, which means faster transit times between the Mid-Atlantic recyclers and New England and other new opportunities for trade. Another huge benefit is having one set of rules pertaining to part preparation and how parts are shipped. With one set of rules that everyone has to abide by, we can market Team PRP to end customers, insurers, etc. and take a bigger bite out of the overall market.
The future is bright for the industry.
To find out more about Team PRP, visit teamprp.com
