Salt Shortage 2018-2019
As summer begins to wind down and operations begin to move towards the cooler months ahead, there is a large topic that is racing across the Midwest—Salt. For some of you who don’t want to think about winter, or are busy working in the landscape industry themselves and haven’t even begun to think about the upcoming winter of 2018-2019, take a moment to read this article.
The loosely termed “average person” is not ready to admit that in the next few weeks here in the Midwest, the seasons will begin to change— if they have not already. Most average people take for granted that the DOT (Department of Transportation) in their own towns, villages and cities do their best to manage the conditions of the roads during the winter season. Likewise, private snow contractors do the same to their contracted parking lots and sidewalks. However, this season could provide a new challenge for the DOT as well as the private snow contractor.
The Midwest on an average year consumes nearly 10 million ton of salt. Considering there are 3 or 4 main producers of salt in North America, those providers are responsible for salt provided to the DOT as well as the private contractor—here in lies the challenge.
See Example of DOT Bid Tabulation
The DOT starts the process of what we call salt allocation usually no later the May every year. The salt manufacturers or producers responsible for filling orders to the DOT for their estimated salt usage for use in winter weather events for the upcoming winter season. These orders trump the private snow contractor’s orders. While it is equally important to provide safe parking lots and sidewalks to the public, DOT is required to provide safe roads for transportation to and from those private parking lots and to the general public. Once the salt producers have filled the orders from the DOT, the remaining salt is then sold off to large snow contractors and salt brokers/resellers. These salt brokers buy the remaining salt at a higher price point than DOT due to the lesser quantities of purchase (this being compared to the quantities of every town, village and city in the Midwest.)
In the world of private snow contractors, a majority of the industry is made up of small operations consisting of 1 or 2 truck operations which usually buy their salt in small quantities of a ton or two at a time from local resellers/ supply yards. The cost of this salt to the small private contractor is at a much higher price point than that of the DOT. Each time the salt transfer’s ownership, the risk and cost increases. Medium size private contractors often purchase and store salt at their location of business or even on-site depending on the requirements of their contract and how their operations are laid out. This “level” of snow contractor takes large risks of procuring often large quantities of salt and having it sit all season. The more salt that is sitting, the more money that is for a lack of better terms “just sitting around”.
Salt Allocation and Price comparison DOT.
The cost of salt to the private contractor can range from year to year and even day to day depending on the quantity and storage ability. As I mentioned earlier in the article, the Midwest consumes approximately 10 million tons of salt per year. 3 or 4 producers/ manufactures…you get the gist. 2018-2019 has already been labeled a salt short year. In the beginning parts of the year, there were a few complications with the salt producers and their mines. A few of which were labor related. Salt mines halted production of salt for nearly 6 weeks in “peak season” due to labor shortage and labor strike. The labor strike resulted in increased wages for the mine workers as well as the loss of weeks of production during a key production time of the year. Herein producing the salt shortage of 2018-2019. Like most things now and days, whether it is a necessity or not, salt is a commodity. Salt alike most commodities, undergo the supply-demand chain. Due to the need (or demand) for salt in the Midwest, the cost of salt has undergone the supply-demand chain increase. This increase is being reflected to the private contractor with absurd pricing of nearly double prior seasons cost per ton.
As a medium size snow contractor, we have been dealt the task of responsible salt management. Rock salt is classified as a non-renewable resource, very similar to oil and coal. Now any responsible snow contractor can sit down and figure out that the cost of providing this de-icing service to clients comes at a bigger cost than just the product its’ self. One of the main costs is an often overlooked cost, which is our environment. If you are a private contractor, you have most likely heard the term “sustainability”, but until you dig deeper you may not know the real meaning behind it. Rock salt is not sustainable, not anymore considering there is a better way that can have a number of cost saving benefits to you, your clients and to the environment.
Stay Informed my friends,
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