Higher levels of trade and consumer disposable income will push up demand and prices for material handling services.
Los Angeles, CA (PRWEB) December 04, 2013
Material handling services have a buyer power score of 3.5 out of 5. According to IBISWorld procurement analyst Lauren Setar, "low price volatility, specialization and switching costs allow for stronger buyer negotiation power." The most significant cost to suppliers is wages; suppliers do not depend as heavily on other inputs, reducing volatility. As a result, there is little risk in the supply chain of material handling services. Similarly, prices have not fluctuated much, as material handling services remain in the mature product life cycle stage. Over the past three years, prices have grown slowly; price growth is forecast to be slightly faster in the next three years. This price growth is primarily due to expansion in economic activity.
"Buyer power remains strong because of high competition among material handling service companies and low risk of supply chain disruption," says Setar. Competition is heightened by the large number of suppliers and low switching costs for buyers. Consequently, buyers that regularly require material handling services can negotiate for a lower price because long-term contracts help suppliers gain efficiencies and a steady flow of cash. However, buyer power is somewhat limited by the costs associated with material handling. In order for products to be handled by suppliers, buyers must pay for transportation. Depending on the mode of transportation, these costs can be expensive for buyers. However, this cost can be somewhat mitigated if buyers purchase transportation services from material handling service providers. Suppliers may offer transportation services at a discounted rate if purchased along with material handling services.
Material handling services are typically priced on the basis of a lump sum per truck, boxcar or any other container used for transportation. There is generally a large price range available to buyers, depending on the capacity of the job, the mode of transportation, the use of special attachments and the state of the cargo. For example, cargo up to 11,000 pounds per truck costs less than cargo that is more than 30,000 pounds capacity. Moving less volume takes fewer labor hours or machinery needed compared to a larger load. Along with this, loading or unloading for different modes of transportation can vary cost buyers pay. For example, railcar freight handling costs more than truck, van and trailer handling. Suppliers may also add on an additional charge per load if special attachments are required, such as barrel pickers or squeeze devices. This may be especially applicable if goods are noncontainerized and require more care and attention to be loaded or unloaded. The four largest players in this market are Evergreen Shipping Agency, Carrix, Freight Handlers, and Premier Warehousing Services.
For more information, visit IBISWorld’s Material Handling Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of material handling services. These services include freight loading or unloading, as well as weighing services for irregularly-shaped, packaged, unpackaged, labeled, unlabeled, palleted or unpalleted goods for water, rail, road and air transportation. These services also include cargo weighing services, but do not include material packing or crating or the actual transportation of goods.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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