Increasing input costs have been the main drivers behind the recent price increases in the tank cleaning services market; however, demand markets have been weak in recent years, curbing suppliers’ ability to raise prices
Los Angeles, California (PRWEB) August 03, 2014
Tank cleaning services have a buyer power score of 2.9 out of 5, indicating an almost even split of negotiating power between buyers and suppliers. According to IBISWorld business research analyst Scott Winters, “Two of the most important factors affecting buyer power are market prices and price trends, both of which are favorable towards buyers.” Buyers can also take advantage of bundling related goods to gain more value for their purchase. On the other hand, there is a distinct lack of substitutes for tank cleaning services available in the market, making it more difficult for buyers to gain leverage in negotiations. Moreover, tank cleaning services are relatively specialized, requiring particular equipment and industry knowledge, making it even more difficult for buyers to bring down prices through negotiating. Major vendors in the tank cleaning market include FCC Environmental, Veolia Environmental Services, Clean Harbors and IVS Group.
Demand for tank cleaning services has been waning in recent years as government spending and oil prices decline. “Because governments and oil refineries make up a large portion of the buying market for tank cleaning services, these trends have prevented tank cleaning suppliers from keeping prices high,” says Winters. This has been very beneficial to buyers, which have been experiencing modest price increases in the past three years. Prices have not fallen, however, due to increasing input costs such as soap and chemical cleaners and waste disposal services. Additionally, the price of tank cleaning services has shown little volatility by increasing at an almost constant rate from 2011 to 2014. Low volatility is beneficial for buyers because it allows for more accurate price predictions and more effective long-term contracts.
On the other hand, suppliers are able to take advantage of the fact that these services are relatively specialized, with not many service providers operating in the market. Also, there are few effective substitutes available for buyers to use as leverage, which pulls buyer power downward. On the whole, however buyers have a small but noticeable advantage over suppliers, making it wise to purchase these services soon or use a supply contract to lock in current prices. For more information, visit IBISWorld’s Tank Cleaning Services procurement category market research report page.