UCO collectors debate endlessly the question of which trading house they should sell their oil to. What should a UCO collector look for in a trading house? This blog will explain how used cooking oil trading houses operate and why Reiter Trading is different from other used cooking oil trading houses.
Why Some Trading houses try to minimize what they pay the UCO collector
During the Great Recession that followed the financial debacle of 2008, numerous articles detailed how the greatest trading institution of all, Goldman Sachs, was betting against their own clients. When the goals of a trading house are not aligned with the goals of their clients, they are betting against their clients. Would a UCO collector want to sell their oil to someone whose primary motivation is to pay as little as possible for that oil? Some trading houses operate that way. They buy oil from UCO collectors for as little as possible and turn around and sell it for the maximum they can get.
In this business model, the trading house seeks to minimize the price they pay the UCO collector. Their profit comes totally from the margin: the difference between what they pay the UCO collector and what they receive from the biodiesel company. It’s a little hard to operate on trust when the motivations of the trading house are the opposite of the UCO collector.
Why Reiter Trading is different from other used cooking oil trading houses
Reiter arranges sales of UCO to biodiesel companies. It seeks to meet the goals of the UCO collector by arranging contracts that meet the needs of the collector. For instance, a collector may want to lock in a price for 6 months because he believes the market price will decline, or even more often, because they have large capital expenditures planned for the coming time period and a drop in price would make the planned expenditures impossible. Reiter Trading can arrange such a contract. If the collector believes the price of oil is going to increase, then he may not want a fixed price contract but want Reiter to shop each month’s loads for the best price. Reiter takes a smaller fee than most used cooking oil traders, and seeks to meet the needs of his clients, the UCO collectors, for years to come rather than merely maximizing the profit on the spread between purchase and sale on a given trade.
Why does Reiter Trading operate this way?
Reiter Trading operates this way because it is part of a group of companies (Reiter Consulting and Reiter Software) which collectively operate in partnership with UCO collectors. The Reiter companies help UCO collectors launch their businesses, grow their businesses and manage their businesses for maximum profit.
The Reiter companies align themselves with their clients to ensure that their clients, the UCO collectors, achieve their goals. They operate in concert with UCO collectors, not against them.
A business partnership works when it is built on trust. Reiter Trading and the other Reiter companies have built partnerships built on trust for 15 years.