Rock salt prices have gone up by 62% in the past 10 years.
Of course, I probably didn’t have to tell you that. In fact, you might have read that number and thought “My salt costs went up 50% last year alone!”
For many snow removal businesses in the Midwest and Northeast, that was true.
You might also be thinking “The brokers must be making a killing of off us.” The unfortunate truth is that bulk rock salt prices will continue to climb this season for a number of reasons. Almost all of which have to do with supply problems.
If you follow industry news, you’ll have noticed some major events that suggest the Midwest will be several million tons short of market demand this season. For reference, the Midwest typically uses around 10 million tons, so we’re anticipating a massive shortfall that will seriously jeopardizes many businesses’ supply lines.
What’s Impacting The 2019 Salt Supply?
First, there have been transportation issues. The Illinois Waterway, which is how much of the Midwest gets their salt, has had partial closures for repairs. These closures delayed shipping, increasing costs for ship owners, and will ultimately be transferred to the end consumer.
The Mississippi has also faced major issues. Traffic was delayed by 60-days (From its usual open in March back to May). You might think that this isn’t an issue for winter salt supply, but this delay has caused several secondary issues, including barge and diesel shortages, both of which will impact delivery costs.
A major accident happened in May when a bulk salt loader owned by K+S (Morton) in Patillos Port, Chile collapsed, damaging a ship and spilling an entire shipment of salt into the ocean. To make matters worse, this was one of only two loaders on site, which means half of their loading capacity will be out of commission for the next 8 months.
Other issues impacting this year’s supply include worker strikes in the Bahamas and suppliers exhausting their 2018 supply.
Any of these factors individually would impact salt availability to a noticeable degree, but to have all of these factors occur in one year suggests that the 2019-2020 winter will be difficult.
When Availability Is Impacted, So Is Price
Many suppliers will be buying from a smaller and more expensive inventory (whatever is left after the government and large retailers get their share.) They’ll likely pass those costs on to their customers. The increase supply concerns will also make many suppliers insist on selling smaller quantities to preserve their inventory, or they’ll just run out in the middle of the season.
After a decade in this business, I’ve seen the fluctuations and the contributing factors on supply. Like any good snow removal business, I know that you have to prepare for the winter season well before the first snow flake. I’m confident when we promise that we will never run out of salt and we will never raise prices on you mid-season.
Why Am I So Confident?
In 10 years, we’ve never run out of salt. We’ve also never had to raise prices mid-season because we’ve miscalculated our supply. In fact, we lock our prices in at the beginning of the season and hold ourselves to it.
Our supply is already secured, and we’ve built a supply chain that ensures factors that impact other regional suppliers won’t impact us.
You could wait and see what this season will be like, but that will put your business in a position of experiencing a shortage or crunched margins. Or, you can guarantee access to salt throughout the season at a fair by partnering with us.