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Comodities Clause

Discussion in 'Ice Management' started by EPM, Aug 15, 2014.

  1. EPM

    EPM Member
    Messages: 94

    Anyone have a good Comodities clause in their contract i could take a look at? Just want to make sure mines up to snuff for the reaming we're about to take on salt this year.
     
  2. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    Looking for the same thing. Not looking to see your contract just looking to see how people word salt issues and pricing.
    Something along the lines of: Salt prices are based on normal availablity and pricing. In the event of shortage or price increases over X% or X$ price is subject to change. I would elaborate on this more obviously but just seeing how others have worded this.
     
  3. snowman55

    snowman55 PlowSite.com Addict
    Messages: 1,071

    simply " salt is a commodity, prices for salt applications are subject to change based on market rates."
     
  4. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 657

    ^^ snowman nailed it.
     
  5. EPM

    EPM Member
    Messages: 94

    I guess i was over thinking it. Thanks for the response.
     
  6. Camden

    Camden PlowSite Fanatic
    Messages: 6,598

    This is fine for now but once your price doubles from one application to the next you're going to have some furious customers and a broader explanation will need to be given.

    Maybe state that you will contact the client if/when prices increase?
     
  7. snowman55

    snowman55 PlowSite.com Addict
    Messages: 1,071

    Camden,
    I quess that would be common sense customer service. We have only had to use this clause 2 times. If we need to raise prices because of market conditions we inform customer so they can determine service level costs and adjustments. Just like we do with fuel surcharges.
     
  8. EPM

    EPM Member
    Messages: 94

    We've only had to use a fuel surcharges once and havent had to use the comodities clause yet. Hoping we dont have to this year. Have hopefully purchased enough product for the year already. Awaiting delivery next week. Just trying to think ahead just in case. The things i would have rather done with that big check..... i'm thinking Powerquest 380 Avenger or a new loaded Corvette.
     
  9. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    How do you all plan on verifying "market rate" of material cost to your clients? The client is just going to take your word for it? Market rate varies greatly in every region.
     
  10. Camden

    Camden PlowSite Fanatic
    Messages: 6,598

    Good point. Unless you're willing to show your clients your invoices they'll need to take your word for it.

    I suspect that there will be a lot of news coverage on this topic throughout the winter so the word is going to get out there that prices have skyrocketed. Even late last year the news outlets did stories on the increasing costs of salt and how it was affecting municipalities.
     
  11. snowman55

    snowman55 PlowSite.com Addict
    Messages: 1,071

    The clause is only to cover extreme situations so I have no problem showing cost of salt if it was requested. Again it is about communication. Call properties and tell them salt services have gone up by x dollars due to shortages would you like to continue current service levels? We have only had to use a few times and has never been an issue. Reason for clause is to have ability to recover costs out of our control, and protect for liability should product become unavailable. If contract says you will salt after a snow fall for $150 and in January there is no salt left in state and you used 2 times your quota, so your bin is empty, you have an out by telling cust the only way to salt is to truck it from texas at $250/ton so would you like the same service level it will now cost $300 per application.
     
  12. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    I was thinking of this for extreme scenarios also. I know last year some people had a hard time getting salt and to get it were paying 50% more for it. We somewhat saw it coming and were able to secure some ahead but did have a period we ran a bit short.
    The most important thing was communication. We notify all properties before during and after snow events as to what is happening. I was already mentioning the possibility of salt issues a month before there was any. When it did happen we let people know we would run a salt sand mix to make the salt go farther for those that would allow it.
    I see the clause working in somewhat the same form. It's a prewarning that hey things could get bad. We will do everything in our power to limit this and probably never use it but it's a first effort to get the word out. In the event it did happen we would notify people ahead of time explaining salt was X now it's Y we need to raise your salt price by Z or cut back or skip it. We are not out gouging people on applications so if I had to share cost of salt now and then I would be ok with that and justifying why we need to raise the App price. Again we pan ahead as much as we can and probably will never use it but I figured it couldn't hurt to put in the contract.
     
  13. EPM

    EPM Member
    Messages: 94

    Thats where im at on it. The truck that pulled out 20 minutes ago puts us at 165% of last years salt used currently on hand. Wanted to cover my rear just in case.