Snow removal refers to removing snow from buyers' driveways, pathways, roofs and landscapes from the site, creating safe egress and ingress of the specified space.  Key buyers include municipalities, property managers and owners who generally procure services to clear snow from parking lots and sidewalks.  Suppliers include non-employers, sole proprietorships, specialized snow management companies and diversified property maintenance firms.  The Snow Removal Cost Array Analysis is designed to provide a breakdown of costs associated with snow removal activities.  Updates will occur at least semi-annually, but more frequent as market conditions change based upon market variability, criticality of events and velocity of market conditions, such as inflationary increases / resource and material availability.  

Overview Snow Removal Services

Snow Removal Costs - 2023 

Overhead - 38.1%

Profit - 4.8%

Wages - 30.9%

Purchases  - 26.2%

Cost Breakdown USD                                  Overhead 38.1%         Wages 30.9%         Purchases 26.2%     Profit 4.8%           TOTAL (100%)

Market Pricing Per Hour

(Mar 23)                                                               $38.1                             $30.9                       $26.2                     $4.8                         $100

Price Trend 2020-2023 Annual CAGR                                                                                                                                                   1.3%

Crude oil prices have dropped from summer peaks, but remain highly volatile - record highs of $120 per barrel in summer 2022, bottoming out at $66.74 per barrel in March 2023.  However, crude oil prices have since returned to growth.

Price Pressures / Environment  

Cost Breakdown & Key Points

• Fluctuating annual precipitation levels have increased rainfall intensity across a number of areas globally and this is expected to elevate further over the next few years.  This trend will lift demand as increased snowfall will cause businesses a greater need to use snow removal services.  Conversely the western states of the continental US have experienced drought conditions for several years.  As weather patterns become more unpredictable there is a need for greater flexibility in service options / offerings
• Vendor risk is high in this market due to risk factors such as the imposition of tariffs on rock salt from China, which has complicated the procurement process. Vendors’ reliance on snowfall for revenue creates further risk as unseasonably mild winters dramatically reduce demand, negatively impacting supplier financial stability.  Risk also stems from the small number of upstream suppliers that offer snowplow equipment; with minimal competition among equipment suppliers, snow removal companies do not have much negotiation power and must often pay higher equipment costs
• Prices in the market are forecast to rise as supply chain shortages persist resulting in increased costs of parts and increased labor as suppliers extend their use of old fleets due to delayed fleet production, which has driven up the cost of labor
• Low levels of substitution exist because businesses find that contracting these services out is a better use of time and money, as services are sporadic and seasonal 

• Repair & Maintenance 13.9% 
• Depreciation 2%
• Rent & Utilities 3.1%
• Marketing 1.2%
• Other 17.9%

The average rock salt price has increased due to a rock salt shortage caused by a surge in municipal stockpiling.  Rather than absorbing rising purchase costs, most suppliers have added price escalators into their service contracts; as a result, there has been upward pressure on prices, hindering the rate of price declines

• Salt & Deicing 16.7%
• Fuel & Other 9.5% 

• Average wages - administrative & snow removal services 30.9%

Truck maintenance services have been rising due to increases in replacement part prices and sustained demand among essential freight transporters. This trend has pushed market prices upward as increased prices offset purchase costs.

During the past three years, wages for workers have been rising as employers have had difficulty hiring and retaining personnel.  This trend has been putting upward pressure on market prices.

Outlook & Opportunities

• Supplier ESG Objectives - suppliers in this market have moderate commitments to ESG initiatives. As such, buyers are advised to seek out vendors that can satisfy internal ESG procurement goals or metrics
• Snow removal services have a very low total cost of ownership. The main additional cost to buyers outside of the purchase price is coverage for events outside the scope of the supply contract, such as unexpected and excessive amounts of snowfall or the addition of de-icing services such as salting
• Market Share Concentration: Low - the top 4 vendors in this market control
  less than 30% of the market share
• Regulatory change has been slow in this market, indicating a minimal threat of drastic changes due to new regulations
• ED&I - there are plenty of opportunities for sourcing from women, veteran and minority-owned businesses, meaning buyers may be able to meet diversity metrics or values for this market.  Buyers should source from ethically responsible companies who ensure fair labour standards, leave benefits and equal pay are embedded within their employment policies (i.e. some employees in snow removal can be asked to be on call for a 24-hour shift, which is materially different from other occupations. Additionally, workers are requested to work in the middle of snow storms, which can lead to driving accidents and injuries).

Key Cost Driver Information sourced from  Procurement IQ Procurement Research - 48646329 Snow Removal Services 

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GLS-010 - Ver 1.0 (August 23)

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