Demand will continue to rise and pressure prices upward, but further declines in fuel costs, relative stability in wages and high price-based competition will dampen price growth
Los Angeles, California (PRWEB) January 30, 2015
Bulk earth transportation services have a buyer power score of 3.7 out of 5, indicating high negotiation power for buyers. According to IBISWorld market research analyst, Hayden Shipp, "Although the construction sector has grown strongly over the past three years, increasing demand for this market's services, buyers still wield considerable control in negotiations." This market is highly fragmented and dominated by small suppliers in terms of number of firms and revenue. This market structure is due to the earthmoving business's low barriers to entry, including low start-up costs and a low level of specialization. As such, new suppliers can easily enter the bulk earth transportation service market, especially during periods of heightened demand. Major vendors in the market include Brown Transport, Fullone Trucking and Barney Trucking. The fact that earth is only cost-effectively transported over short distances has averted supplier consolidation, normally a trait of a mature market such as this one. Instead, most firms have fewer than five employees and serve only a local customer base. These market dynamics have enhanced price-based competition and increased buyers' supplier choices.
The market's high level of price-based competition is evident in its recent price trend. "During the past three years, prices for bulk earth transportation services have risen at a relatively slow pace despite significant growth in demand from developers and contractors," says Shipp. Price gains have been low on account of negligible overall growth in the costs of fuel and labor, suppliers' two main inputs. As such, suppliers have limited their price increases to better compete for business. Suppliers' profit margins have improved on average due to increasing capacity utilization and relative stability in major input costs. Buyers benefit from the healthy profit margins because suppliers have more room to discount services for desirable customers, those that are or could be long-term or whose projects are highly visible or prestigious.
Price growth is forecast to remain mild in the three years to 2017, continuing to benefit buyers. Still, few substitutes exist for this market's services, limiting negotiating power by heightening dependence on the market’s existing suppliers. For more information, visit IBISWorld’s Bulk Earth 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 bulk earth transportation services. Suppliers use trucks to transport a variety of dry bulk materials, most of which are used for construction or removed from construction sites. Such materials include gravel, rocks, topsoil, sand, limestone and cement powder. Transport is generally limited to short distances.
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.