Price growth has been slow because suppliers faced competition from other shipping modes
Los Angeles, CA (PRWEB) April 26, 2014
Deep sea cargo transportation services have a buyer power score of 3.6 out of 5, indicating a high level of buyer power. Low price volatility over the past three years and low total cost of ownership are the primary drivers allowing for stronger buyer negotiation power, says IBISWorld analyst Lauren Setar. During the past three years, prices have not fluctuated much, primarily falling in line with economic activity. Greater industrial production, a higher trade value and the growing number of businesses have created steadily rising demand for the deep sea cargo transportation market.
The market's mature life cycle stage points to low price volatility, allowing for greater buyer negotiating power. Additionally, the ownership costs are low, benefiting buyers and allowing for greater purchasing power. Although buyers typically require tracking, customs presentation, preparation for hazardous materials, storage and a range of other services, the fees associated with these services are not typically hidden, and suppliers usually bundle extra services in the total price. Buyers also gain negotiation power through the market's moderate level of competition. With competition, suppliers aim to win business by lowering prices or working with buyers for favorable terms, says Setar. Buyers are not limited by the number of deep sea cargo transportation service providers in the market and can choose from many suppliers to get the lowest price.
Although buyers have a large amount of negotiation power, they face fluctuating input costs, specifically the price of fuel. While buyers can negotiate rates downward through large shipments or contracts, fuel surcharges are generally nonnegotiable. As the price of fuel increases, suppliers face higher operational costs to ship cargo; this factor adds risk to supplier operations and this cost is eventually passed on to buyers in the form of higher prices. Although fuel prices are anticipated to increase over the next three years, buyers with high volumes and consistent shipping needs will nevertheless benefit from long-term contracts. For more information, visit IBISWorld’s Deep Sea Cargo Transportation Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of deep sea cargo transportation. This form of transportation involves US flagged vessels and non-US flagged vessels that move freight. Activities include moving cargo to or from foreign ports, but do not include the movement of passengers.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
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.