Further growth in demand will pressure price upward, but more significant declines in the oil and natural gas price index will limit suppliers’ rate increases and reduce fuel surcharges.
Los Angeles, CA (PRWEB) April 01, 2015
Petroleum and chemical trucking services have a buyer power score of 3.4 out of 5, indicating favorable market conditions for buyers. The primary market characteristic aiding buyers is low concentration. This market is served by thousands of suppliers, most of which have very little market share. Market fragmentation encourages competition, which mitigates price growth, increases supplier choice, reduces switching costs and promotes stronger service. “Fragmentation is the result of low barriers to entry, which enable new suppliers to enter the market to meet rising demand,” says IBISWorld procurement analyst Hayden Shipp. “Growth in market participation during the past three years has helped keep average price growth in check.”
Oil price trends have also mitigated recent price gains for petroleum and chemical trucking services. During the past three years, subdued economic growth, in conjunction with increased oil production, has brought down the price of oil. The price of diesel fuel, suppliers' primary material input, has also, consequently, declined. Suppliers' fuel costs are passed directly to buyers through fuel surcharges, which represent about one-quarter of suppliers' base rates. The recent drop in fuel costs has, as a result, led to a reduction in the rate of price growth. Although all viable substitute transport modes (i.e. rail, barge and pipeline) are slower than trucks, they are usually preferred for long-distance shipping because they are more energy efficient, less labor intensive and, thus, cost less. “While the availability of substitutes improves buyers' leverage in negotiations for long-haul transport, trucks remain indispensable for most short hauls because they provide last-mile service,” adds Shipp. “As a result, many buyers are dependent on this market's carriers, reducing buyer power.”
This market's segments include refined petroleum transport, which generates the bulk of sales, chemical transport and crude oil transport. The latter segment has represented a rapidly growing share of sales due to increased extraction of unconventional oil in shale formations not served by pipelines. Trucking prices in many shale formations exceed the market average due to suppliers' high utilization rates, reducing buyer power in these regions. For more information, visit IBISWorld’s Petroleum & Chemical Trucking Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of petroleum and chemical trucking services. The suppliers of these services are tank truck companies that transport crude oil, refined petroleum products (e.g. gasoline, aviation fuel, fuel oils and lubricating oils) or chemicals. In this report, suppliers are also referred to as carriers, and buyers are also called shippers.
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
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