Dear Customers,
I’m writing today in the spirit of full transparency to make sure that as you plan your container needs for the Spring of 2021, you are aware of a serious crisis in our industry that has and will continue to impact you until sometime in mid-to-late summer.
As you may have read or been told by our reps recently, the cost of steel has gone up 127% since August. Let me say that one more time – 127% since August. For the sake of simple math, a 30 yard industry standard roll off container had about $1,800 of steel and steel parts in it the 1st week of August, 2020. If all the material was purchased today at the industry index, that cost of steel and parts for the same container is around $4,000, that’s a $2,200 increase, without any increase on our part for production, insurance, labor, utilities, taxes etc. all of which have increased, just as yours have.
In addition to and perhaps more importantly than the cost increase (that’s hard to type!), is that the availability of steel has become an even bigger problem. Our critical vendor partners that have never failed to provide us with quality, on time and cost competitive steel and parts, cannot get materials themselves, including many of the direct to mill buys that we also make. While some expect prices to start to drop in late March or April, even if this happens, container manufacturers really won’t be using that lower cost steel until May or June.
Because of both the cost and availability issues, I know that few manufacturers are going to be able to build their typical winter stock, meaning that the spring rush and wait times will be dramatically longer than normal. There simply isn’t enough production capacity in the Mid-Atlantic, Mid-West and New England to meet Spring demand in normal years and the post COVID-19 Vaccine demand that is about to come will only make this worse. As construction restarts and the nation starts to open back up restaurants and typical venues led times will be months and not weeks.
I’ve only been in this industry for 10 years and have been told that the way you are supposed to deal with rising steel prices is to “lose money as steel goes up and then make that up and MORE on its way down.” To me that’s being dishonest and not the kind of company CCS is and will ever be. We believe that it’s our responsibility to provide you with quality containers, priced fairly and to never take advantage of our relationships. We want to increase profits through growth and efficiency, not by “gouging” our customers when we have the opportunity to do so. We haven’t done that and we won’t start now!
So because of everything, I’ve said above, if you are going to need containers in a few weeks or months, you have to place your orders now! Because as bad as pricing is and will be for several months, the availability is going to be worse!
My promise to you is that as pricing starts to fall in late spring and early summer, we will adjust prices accordingly, even on already quoted orders. We prefer to treat our customers as partners and are happy to negotiate “open book” pricing with our consistent and major customers, so that you can receive your containers on time and know that we are always pricing fairly.
Probably like you, CCS has no interest in being the cheapest dumpster company in the markets we serve. While we make plenty of self-inflicted mistakes, we’ve invested in real engineering, production continuous improvement, quality control and safety professionals, so the we and our sales team members can provide you with the best product and service possible.
I’ve attached an article about the US Auto Industry and how even it, the driver of steel prices and consumption, may have to shut plants down because of the lack of US capacity.
Article: US Auto Manufacturers and Other Facing Steel Shortage
In the coming days, your sales rep will reach out to talk more about this and see if we can work out a plan that keeps your containers flowing when you need them!
Regards,
Todd
Todd A. Vonderheid
Managing Member
