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Why Do Salt Prices Vary So Greatly?!

Now this is a question we may not be able to perfectly answer, but we will try. 

The story goes like this. There are a limited number of salt suppliers in our region. It's important to know that the transportation costs of salt are commonly the largest part of the price. And with these limited number of suppliers comes a competitive market. The first group of salt buyers that, by law, take precedence are the government buyers, for example, everything from Oakland County to lesser buyers like the city of Livonia. But to be clear, all of these types of buyers get to put out an RFQ and get guaranteed pricing and terms prior to any salt sales to contractors of salt brokers.  Once the government agencies have chosen their vendor and their quantity, next in line come very large contractors and salt resellers/ brokers. After that round of negotiating and pricing, comes the average snow contractor. The person who can't store a season’s worth of salt on their property and needs to buy it as they go throughout each snow event. As you can imagine the prices go up as you move through this list.

Now, why do salt prices vary so greatly? Well, because every part of this supply chain can become a weak link and one weak link can shatter the supply chain, thus creating pricing volatility. Like we all experienced in the winter of 2013-14. 

Beginning with the mines and suppliers they can only produce so much salt and they can only move and store so much salt and thus there are limitations on them, which can and do potentially change their pricing.   This same situation can and does occur at the government level as well as the broker and reseller level and finally to the end user/average snow contractor level. Every time salt becomes challenging to get or you need more salt than you signed a contract to receive your pricing can and will change. See, here is what many property owners don't know, large snow contractors and salt brokers (the people that provide the safest and securest salt inventories) commit to and sign a contract to purchase salt in June or July every year, but that's not what most property owners do. In fact many wait until October or later to select a contractor and frequently hire a low cost provider as well.  This is really a dangerous move. The risk to the visitors of the property owners building goes up significantly, if we have a heavy winter and the contractor can't find or has to pay inflated prices for salt. So to summarize - salt pricing really, really, really falls into the age old economic formula of supply and demand.  If supply is low for any one or more than one issue in the supply chain then the further down the chain you are, the greater your risk is to get no salt, little salt and rest assured very expensive salt! 

The solution as a property owner, deicide what's important to you, price or value?  Hire the appropriate contractor and do so by July or August, better yet, sign a 3 or 5 year deal with some caveats for seasonal salt pricing and rest assured that if you selected the right contractor, they have secured the salt, equipment and people to perform at industry standards for years to come on your property.

The solution as a contractor, decide what's important to you, price or value?  Negotiate price and terms with a supplier that can meet your needs and stick with them year in and year out. 

After all people do business with those they trust and know. <3

Thanks for reading,

Troy Clogg

P.s. Interested in our bagged sidewalk HOT PINK Deicer Salt?

Check it out here: HotPinkDeicer.com

Want to work on our team? Visit TroyClogg.com/Careers

Want to be a client of ours? Visit TroyClogg.com/services/commercial-snow-removal.html

 

 

 

 

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