Price growth will be slowed by weaker growth in input costs.
Los Angeles, CA (PRWEB) January 11, 2014
Conditions for procuring containerization services are favorable for buyers. The buyer power score is 4.1 out of 5, where a higher score indicates greater power. High buyer power is supported by price growth that has been subdued and will decelerate over the next three years with slowed growth in suppliers' input costs. Additionally, the price of containerization is predictable and low in volatility; this benefits buyers, who generally prefer to contract containerization services on a per-job basis when they need them rather than arranging long-term agreements. According to IBISWorld procurement analyst Hayden Shipp, “While demand for services has risen over the past three years and will grow in the forecast period with the uptick in manufacturing and trade, low barriers to entry in the containerization business diminish price growth through price-based competition.”
The high level of fragmentation in the market also contributes to buyers' negotiation power because it minimizes switching costs. These costs are already low because most containerization is done on a per-job basis without long-term contracts. Additionally, suppliers are generally financially stable, and their main input is untrained workers, which are widely available. “As such, the risk of service disruption is minimal,” says Shipp. Further enhancing buyer power is the fact that large shippers can often afford to develop the ability to containerize in-house; once price rises above a certain point, these firms exit the market and reduce demand by doing so.
However, containerization services are somewhat differentiated, which helps keep price-based competition and buyer power in check. Containerization firms may specialize in the demanding export business, where shipped goods are often subjected to harsh climatic and mechanical strains aboard ships. Also, some firms specialize in containerization for certain industries (e.g. telecommunications), meaning they operate in niche markets with elevated prices. Firms that can provide add-ons such as freight forwarding and inventory control can also command higher prices, though they may still reduce a buyer's overall costs for shipping and storage. The top four vendors in the market are Nefab Group, United Parcel Service, FedEx and Packaging Services Industries.
For more information, visit IBISWorld’s Containerization of Goods Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help commercial buyers of packing services for shipping. These services include packaging in stock or custom foam, boxes, cases or crates, which suppliers sell along with the labor required to encase goods in these protective containers. Additionally, this report aids in the procurement of packing and unloading services for trailers and intermodal containers that buyers purchase or lease from third parties. In packing these large receptacles, suppliers apply the same techniques concerning the padding, wrapping, bracing and weight balancing of goods that they use in crating. Packing services can be done at either the buyer’s facility or the supplier’s facility. This report does not cover the procurement of shipping services.
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
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.