Chemical and petroleum logistics markets are experiencing increased demand for third-party logistics vendors who provide end-to-end logistics solutions along with other value-added services, according to a recent report.
That was the conclusion of market research conducted by Technavio, the London-based global technology research and advisory company. The research report focuses on what it says are the most important trends in the multimodal transportation market for the chemical and petroleum industry in the U.S. for 2018-22.
According to Technavio analysts, the intermodal transportation market for chemical and petroleum industry in the United States will grow at a compound annual growth rate (CAGR) of more than 7% during the five-year forecast period.
The expansion of the Panama Canal is driving container throughput in the U.S. and is a major factor driving the growth in international intermodal transportation services, the company says.
Monthly statistical reports published by the American Chemistry Council in recent years also have depicted a healthy and growing industry (AA, 4-15-18, P. 3).
In addition, ACC’s most recent five-year forecast of industry growth prospects appears to bear out Technavio’s optimistic predictions, stating that by 2020 U.S. chemical industry sales will exceed $1 trillion. ACC’s research also backs the consulting company’s conclusions regarding the increasing need for 3PL services required to support that growth (AA, 9-15-17, P. 5).
The Panama Canal is driving domestic intermodal growth by encouraging a rise in chemical and petroleum shipments with the advent of larger-sized ships.
This has been a major factor in supporting the increase in U.S. exports because the canal widening reduced the transit times and costs in the ocean transportation of crude oil and gas products, Technavio observes.
The company points out that the U.S. is now the largest market for tanker shipping, including deployment of specialized products, chemical and crude oil tankers.
The increase in the shale gas production in the U.S. also is expand the chemical and petroleum tanker transportation market as well, according to Tehcnavio.
The report also highlights the increasing use of Information and Communication Technology (ICT) in supply chain management as one of the key emerging trends in augmenting multimodal transportation services increasingly used by the chemical and petroleum industry.
The most important value-added services provided by 3PL vendors include grading, packing an assortment of different products, management information system (MIS) services in the supply chain, and supplying the specialized legal and administrative services required by international and domestic transportation, according to the report.
Leveraging 3PL Expertise
Technavio also says emerging technologies in the logistics sector also allow vendors to provide one-stop-solutions to customers and gain traction in the market by helping them increase their market share.
The market has witnessed a trend in which shippers more often prefer one-stop contract logistics providers who provide all these kinds of solutions as well as for the purpose of securing the advantage of the kind of domain expertise these 3PLs offer.
The use of upgraded technologies in logistics sector also is expected to grow in coming years due to the increasing demand for logistics services.
“Owing to the increased production and trade of petroleum and chemicals in the US, the logistics process of these commodities has become complex. Temperature monitoring and timely information are required for time-sensitive chemicals,” according to an unidentified senior analyst at Technavio for research on logistics who was quoted in the report.
“These complexities and inefficiencies in transportation systems generate the need for efficient information and communication technologies, which have been emerging as a key enabler in the intermodal and multimodal transportation system.”
The chemical industry segment held the largest share of more than 59% of the industrial market in 2017, with chemicals being the most produced and traded commodity.
Chemicals requiring expert 3PL services cover a wide variety, including specialty, pharmaceutical and industrial chemicals like resins and agricultural chemicals.
The demand for intermodal services also is growing for oil and chemicals because they contribute to reduction in the overall costs of transportation and increase the supply chain efficiency of these companies’ operations, the report notes.