The Ins and Outs of Purchasing a Truckload of Pipe in the Steel Industry

Understanding the Need for Bulk Purchases: 
Structural steel workers often require a significant quantity of pipe for their production processes. Whether it's for constructing fences, piling, manufacturing bollards, or other applications, buying in bulk ensures a steady and reliable supply of raw materials. Purchasing a truckload of pipe not only meets the demand but also provides cost advantages compared to smaller, more frequent orders. Buying in bulk often eliminates the added layer of freight cost associated with transporting a load of pipe from the testing facility to a distribution yard where most customers pickup or have delivered smaller quantities of pipe. Buying a full truckload enables the seller to match the buyer with a load of pipe coming directly from the testing yard and shipping it right to the project.

Ensuring Consistency in Quality:
When purchasing a load of pipe, whether it’s used #1 or used #2, one must understand the subjective nature of such terms. The customer and seller must also consider the application in which the material will be used. Purchasing used pipe is never without risk, the nature of used pipe is that it was used in the oilfield. Oilfield pipe after use is inherently imperfect. As players in the industry will tell you, there’s no such thing as a perfect load of used pipe. The lengths will be variable, sometimes threads or collars will be cut off, even in loads of #1 material you may find a joint with a testing hole or a couple sticks with IPC (internal Plastic Coating). 

#1 used pipe is considered high end “slick” structural pipe. An even higher bar would be “#1 Brushed & Cleaned”. Brushed and cleaned pipe has been run through a pipe cleaning machine that cleans both the ID (inside diameter) and OD (outside diameter). #1 pipe “should” have minimal pitting or flaking, no blowouts (massive holes from hydro testing), testing holes, splits, IPC (unless otherwise specified), or concrete. 

#2 used pipe is lower end but depending on the situation, can be a much more affordable but still quality way to achieve your structural project. #2 pipe may in some cases have blowouts, testing holes, splits, as well as more pervasive pitting and scale/flaking. This is not always the case however, some #2 is simply - less good #1. Some #2 will have no holes or splits and may have low percentages of pieces with any scale or pitting. Ask your supplier for descriptions and pictures of the #2 you are considering purchasing and make the determination based on the application.

In certain situations it makes much more sense to buy #1 pipe vs #2. For example, a fence builder may have a customer who is requesting a high end fence around their property that they wish to have painted. In this case, it makes more sense to go with #1 pipe over #2 because #2 is far more likely to flake and have more significant pitting. Scale, flaking, and pitting will make the paint job look worse and it won’t last nearly as long. On the other hand, it may make sense to buy #2 over #1 if the primary objective is to accomplish a structural project at the lowest possible cost. 

Vetting Suppliers & Payment Terms:
In the steel industry, it's common practice for buyers to make upfront payments when ordering a truckload of pipe. This may be stressful to first time or infrequent buyers but rest assured that this practice is normal and not as risky as you may think. Buyers can mitigate their risk of being scammed or taken advantage of using several methods:

• Research your potential supplier. Do they have a website, a facebook page, physical address(es) listed. If so, do they have reviews on Facebook and/or Google?
• Check the state authority in which the supplier is domiciled. How long has the company existed? Example: Wholesale Steel BCS, Wholesale Steel SA, and Wholesale Steel Lufkin are domiciled in Texas. A customer can look up the entities formation dates on the Comptroller's website. 
• Does the business have a phone number? When you call the number, do you get the same person you’ve been corresponding with? If you get a different person, ask them if they know the person you were originally speaking to. Ask the person speaking for the address of the business physical location/storefront. Does it match the online address?
• Search the address of the business physical location in Google Earth, does it look like a place you would buy pipe from?
• Ask other people in the industry about the supplier, are they well known in their market? How is their reputation?
• What questions did the supplier ask you when preparing to initiate the order? Did they collect your contact and billing information? Did they send you a formal invoice? Did their wiring instructions show that they have a real business account (example: Chase for Business wire instructions).
• Lastly, if you are still concerned about your supplier, ask them to do a video call. Can they at least show you that they do indeed have a real operation? 

If your vendor shows you that they do have a legitimate business with real assets, you probably have recourse and assets to go after in the unlikely case that they do decide to scam you out of your money. Now you know where they are located and your attorney can set about placing a lien on the assets or pursuing a money judgment.
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It’s normal for suppliers to ask for payment upfront. Afterall, Amazon takes payment prior to shipping you your goods. You don’t go to Target or Walmart and make it out the door with a cart full of merchandise without paying at the counter. Some suppliers will accept payment upon delivery, or accept 50% upfront and 50% on arrival but those suppliers are few and far between. Transactions like that would require long standing relationships and a certain level of trust for most. Most suppliers have been burned too many times to take the risk. It’s not that the supplier doesn’t trust you, it’s a rule that they place on themselves and their employees to ensure they don’t go out of business. Suppliers of used pipe are in a difficult position because their names have been sullied by bad actors. That’s why Wholesale Steel owners have created the Steel Pipe Exchange to create a safer environment for the pipe industry as a whole.

Benefits of Upfront Payments:

• Priority: Suppliers are more likely to prioritize orders with upfront payments, ensuring timely delivery and reducing delays.
• Negotiating Power: Upfront payments can provide buyers with negotiating power, leading to potential discounts or more favorable terms in the long run.
• Establishing Trust: The practice of upfront payments fosters a relationship of trust between buyers and suppliers, creating a foundation for future collaborations.

Buying a large-priced item site unseen can be stressful, and it's crucial to take precautions to protect yourself from potential risks, including the item not arriving. 

Keep Records of the Transaction:
Save all transaction details, including invoices and communication with the seller. Take screenshots of the product pictures if necessary.

Verify Contact Information:
Check and verify the seller's contact information, including a physical address, phone number, and email. Legitimate sellers should provide clear and accurate contact details.

Stay Cautious with Deals Too Good to Be True:
Be skeptical of deals that seem too good to be true, especially if the price is significantly lower than market value. Scammers often use unrealistically low prices to attract unsuspecting buyers.

File a Dispute if Necessary:
If the item doesn't arrive or is not as described, contact the seller immediately to resolve the issue. If communication fails, contact the administrators of the Steel Pipe Exchange to see if they can encourage a resolution - if the buyer and the seller are both members of SPE then it’s often the case that the admins can get to the bottom of a situation. If not, contact an attorney to write a demand letter.