The US chemicals distribution industry includes about 10,000 companies with combined annual revenue of $70 billion. Major companies include Ashland Distribution, Brenntag, and Univar. The industry is fragmented: the largest 50 companies generate about 40 percent of revenue.
COMPETITIVE LANDSCAPE
Chemical distribution is a cyclical business dependent on industrial demand. The profitability of individual companies depends on an efficient distribution system. Larger companies can offer more products and services. Local and regional distributors can compete effectively through superior service. The industry is capital-intensive: annual revenue per employee is about $800,000.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are plastics materials, alkalis and chlorine, detergents and soaps, adhesives, and industrial gases. Plastics account for almost 25 percent of industry revenue.
In addition to selling and transporting chemicals, distributors offer other services including blending, packaging, technical training, and managing customer inventories. Waste removal is a particularly common service to offer. Many suppliers specialize in certain types of chemicals.
Products are bought from manufacturers of industrial chemicals, including petroleum refiners. Multiple suppliers exist for almost all chemical products. A large distributor typically buys from several dozen chemical manufacturers, such as DuPont, Dow, and BASF. Distributors may have long-term distribution agreements with suppliers that specify quantities and price formulas. Such agreements typically renew automatically each year.
Large wholesalers have multiple facilities around the country. Brenntag has over 100 locations, Univar has about 85, and Ashland Distribution has 70. Facilities include warehouses, tank ...
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