Despite the economic recovery and growth in demand, price competition will continue.
Los Angeles, CA (PRWEB) October 23, 2012
Revenue for the Pallet and Skid Rental industry is expected to increase at an annualized rate of 2.7% to $3.6 billion in the five years to 2012. The industry's growth slowed during the recession as downstream demand from the retail and manufacturing sectors declined. Rising unemployment caused consumers to spend less, which resulted in retailers and manufacturers reducing inventory levels. This factor contributed to a decline of industry revenue in 2008 and 2009 as freight volumes declined. However, freight volumes and total trade value have since increased, boosting the demand for pallets and skids used in transportation and warehousing of goods. Furthermore, the industry has benefited from an increasing number of companies that use pallet rental programs rather than purchasing pallets. These factors are expected to cause industry revenue growth of 5.9% in 2012, according to IBISWorld industry analyst Kevin Culbert.
Industry profit margins (earnings before interest and taxes) are estimated to represent 12.0% of industry revenue in 2012, which is down from 19.5% in 2007. Profit declined during the recession as demand declined and firms started to engage in price competition. Reduced profit during the recession, coupled with major players' attempts at gaining market share, has contributed to some consolidation during the past five years. For example, Brambles Inc., the Pallet and Skid Rental industry's largest player, acquired IFCO Systems in April 2011. Such acquisitions have caused the number of firms to increase relatively slow in relation to the industry's revenue growth. In the five years to 2012, the number of firms operating in this industry has remained relatively flat, increasing just 0.6% per year on average to 989, Culbert says.
IBISWorld estimates that revenue for the Pallet and Skid Rental industry will increase in the five years to 2017. Industry revenue will increase as the US economy continues to recover from the recession, boosting demand as freight volumes rise. In spite of this growth, profit is not expected to eclipse prerecession levels due to an expected increase in price competition. In 2012, the top-four companies are expected to account for more than half of total industry revenue. For more information, visit IBISWorld’s Pallet & Skid Rental in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that rent pallets to downstream markets for the storage and transport of goods. Following use, pallets and skids are returned to industry operators for cleaning and repairs. Services are included toward this industry's total revenue. Although pallets and skids differ slightly in their construction and purposes, the words are mainly interchangeable.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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