IBISWorld, a publisher of business intelligence, is providing a refrigerated storage services procurement report.
A high amount of buyer power is present when procuring refrigerated storage services. These services have a buyer power score of 4.2 out of 5.0, reflecting slightly more power for buyers than suppliers. Low price volatility, specialization, and switching costs allow buyers to have a relatively high amount of power.
Prices for refrigerated storage, while higher than general storage or warehousing, have remained steady as services have remained in the mature stage of the market life cycle. Generally, features like location tend to be more important to buyers than price because the products buyers are storing in refrigerated warehouses are perishable. Consequently, location is crucial for buyers to be able to move inventory as efficiently as possible.
“Buyers must also be aware of the costs associated with refrigerated storage,” said IBISWorld analyst Lauren Setar.
Typically, products reach the warehouse by way of temperature-controlled trucks; therefore, trucking is the main additional cost for buyers. Packaging, cross-docking, and distribution are also integral pieces of a product’s journey to the desired end market so buyers should keep these costs in mind as well. Many refrigerated storage services suppliers will offer these services as an add-on to initial storage operations.
Ultimately, the location of firms, total cost of ownership, and a lack of available substitutes limit buyer negotiating power. According to Setar, although pricing has increased marginally in the three years up to 2013, it is expected to grow faster in the three years to 2016. Therefore, buyers should try to lock in a long-term contract with a supplier. Unlike month-to-month agreements and short-term contracts, long-term contracts allow a buyer to negotiate for a lower price point.
This report is intended to help buyers of refrigerated storage services make informed purchasing decisions.
For more information, access www.ibisworld.com or call 1-800-330-3772.
