Improving global economies are projected to increase the number of US exports, resulting in more cargo being shipped and inspected. Suppliers are anticipated to raise prices in response to the higher demand
Los Angeles, CA (PRWEB) October 05, 2014
Cargo inspection services have a buyer power score of 3.3 out of 5. This score indicates that buyers have more leverage than suppliers during the negotiation process. Demand for cargo inspection services has risen over the past three years as the economy has slowly improved and trade activity has risen. “Increased trade activity means more cargo to be inspected and higher demand for cargo inspection services, which makes it easier for suppliers of these services to raise prices,” according to IBISWorld business research analyst, Aileen Weiss.
However, buyers benefit from the low market share concentration, moderate level of product specialization and low price volatility in the market. Low market share concentration guarantees that no one supplier has control over the market, so prices should not reach unrealistic highs. Low market share concentration also results in a high level of competition among suppliers. Buyers have numerous suppliers to select from in each port and can negotiate lower prices by guaranteeing that they will use the same supplier in other ports or on future projects. Although there is a moderate level of product specialization for cargo inspection services, buyers should still have a variety of suppliers to select from. They just need to ensure that their chosen supplier is experienced in handling their type of cargo.
“Low market share concentration and moderate specialization give buyers more leverage during the purchasing process, but buyer power is hurt by a low availability of substitutes and moderate supply chain risk,” says Weiss. Federal regulation mandates that cargo must be inspected, even if there are some containers in a shipment that are not opened or thoroughly checked. There are, therefore, few alternatives to using a certified cargo inspector, which limits buyer negotiating power. Although buyers could consider completing the process in-house, most find the practice expensive and impractical. In addition, bottlenecks in ports may result in backups that can lead to postponed inspections and shipments and, thus, supply chain risks and increased prices. Buyers should, consequently, lock prices in a long-term contract to avoid future price spikes. Major vendors include Intertek Group PLC, SGS SA and Vigor Industrial LLC. For more information, visit IBISWorld’s Cargo Inspection Services procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of maritime cargo inspection services including packing inspection, cargo surveying and pest control. Cargo inspection service providers do not actually ship goods, but they do prepare cargo for transportation through testing, measuring, weighing and verifying shipments. This report excludes the inspection of cargo in cars, trucks and vans.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
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.