By Cheryl Higley, Editor
Last winter, several contractors in the U.S. and Canada were faced with dwindling salt supplies and were forced to scramble to locate more product, often paying a premium—if they could obtain it at all. Preventing a repeat of this scenario, according to those in the salt industry, requires managing your inventory, understanding the supply chain and building relationships.
Order up
Sean Riley, marketing manager, Cargill Deicing Technology, encourages customers to order as far in advance as possible, having the majority of their needs purchased and on hand by Oct. 1. "We realize this is difficult for those who do not have the storage facilities to handle 100 percent of their needs," he says. "But having the ability to store the bulk of their supply prior to winter helps tremendously."
The earlier you order, the more likely you'll receive a cheaper price as well, says Richard L. Hanneman, president of the Salt Institute, a non-profit salt industry trade organization dedicated to advocating responsible uses of salt.
If it's the middle winter and you're out of materials, "Private contractors are going to be at the end of the line. If you aren't going to be a large purchaser, you must make an effort to lock up supply early. Those who can take delivery early (March through July) will get better prices," he says.
Don't forget about packaged products, cautions Robert George Jr., vice president of Industrial Sales & Marketing for International Salt Co., which is the largest salt supplier to the U.S. East Coast. "Order early to avoid the last-minute scramble that took place last November when it started to snow. Having some onsite storage capacity for bulk material will also help contractors avoid just-in-time dependence on their ice melters."
I need it now
Understanding the supply chain can help protect contractors from experiencing shortages. There is no shortage of salt, Hanneman says, but it takes time to get it through the supply chain, which can't be done in a week or two.
Riley agrees. "Last winter was one for the record books. The early demand and non-stop weather though March stressed the ability of some salt companies to keep up with the extraordinary demand throughout North America," he says, adding that Cargill maintains several terminals to allow the company to strategically position the product to try to match demand.
He cautions contractors not to panic and overbuy. "It is vital to have an accurate understanding of what your needs are for the year. What typically happens after a heavy winter is a customer may over-estimate their needs to protect against another possible shortage. But even at a 5% over-estimate, that
adversely affects supply."
It's in the relationships
So how can you strike a balance? Build relationships so that if you get in a pinch, you know to whom you can turn.
"I cannot stress the need for partnerships enough. Work closely with your supplier to communicate supply needs and service expectations so that both parties understand each others' requirements and capabilities," Riley says. "There is nothing better than a contractor coming to us after the season and thanking us for the value we helped them create. When both parties focus on more than just price, everyone wins."
Sticker shock: Price hikes likely
Snow and ice management professionals can expect to pay more to stock their salt piles for this coming season. While the costs of the actual product are rising, most of the increase in price is a result of skyrocketing transportation costs.
Many variables play into the price contractors pay for their materials—for example, proximity to stockpiles and transportation avenues, areas of the country, etc.—but there was a consensus from those interviewed that few will be immune to the price hikes.
"Price increases will be dramatic this year due to skyrocketing ocean freight and increases in fuel and transportation," says Robert George Jr., vice president of Industrial Sales & Marketing for International Salt Co.
Citing antitrust rules and the variables noted above, no one would project exact increases; however, they offered insight on where in the supply chain the increases are occurring:
At the mine
Labor and operational costs are increasing, so getting the salt out of the ground is more expensive; costs associated with getting it to the end user are even more so, says Richard L. Hanneman, president of the Salt Institute.
Transportation
Rail and truck transport is always a more expensive option, but high fuel costs and constraints on available trucks and rail cars are pushing those costs even higher. Water, Hanneman says, is still the most efficient shipping method but "barge rates are going up astronomically," he explains. Summer flooding of the Mississippi River resulted in closed locks, disrupting shipping lanes. A rough hurricane season could further disrupt barge traffic. And should waterways (including the Great Lakes) experience early ice, resulting in a shorter shipping season, this will contribute to price increases for those who need materials mid-season.
"Logistics costs (getting the salt from the mine to the customer) are often more than the cost of the salt itself," Hanneman says. "Prices go up as you get into the season. Once you don't have the option of bringing it up the rivers or the lakes freeze, you lose your option for cheap salt supply."
Cheryl Higley is editor of Snow Business magazine. Contact her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
