Chemical Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,000 chemical distributors in the US resell chemicals; plastic materials, forms, and shapes; and related products. Firms may perform custom blending or packaging services. Some distributors may manufacture chemical products. Large downstream industries include consumer products, rubber and plastic products, health care, agriculture, semiconductors and electronics, construction, paper products, motor vehicles and parts, mining, fabricated metal products, textiles and fabrics, and food products.

Competition from Manufacturers

Chemical distributors compete with both domestic and foreign manufacturers, which typically have direct relationships with large customers.

Regulation of Hazardous Materials

Many chemicals are considered toxic or hazardous, and subject to regulations which govern storage, handling, and transportation.

Industry size & Structure

The average chemical distributor operates out of a single location, employs 17-18 workers, and generates about $14 million annually.

    • The chemical distribution industry consists of about 8,000 firms that employ about 140,900 workers and generate about $113 billion annually.
    • The chemical distribution industry is somewhat fragmented; the top 50 companies account for about 58% of industry revenue.
    • Large multi-national companies include Univar, Brenntag, and Prinova.
    • The chemical industry is global - large manufacturers, distributors, and customers often have international operations. Some large chemical manufacturers are vertically integrated.
                                  Industry Forecast
                                  Chemical Distributors Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 20, 2023 - Preventing Disasters
                                  • The chemical industry is exploring ways it can help avoid future public health and environmental disasters like the one caused by the February derailment of a Norfolk Southern train in Ohio, according to a March article in Chemical Processing (CP). Proposed solutions include closer oversight of logistics partners’ safety practices -- including auditing providers and their vehicles to ensure they meet safety requirements -- and new supply chain strategies that minimize shipping distances for hazardous materials, CP reports. Chemical suppliers also should know the maintenance practices of their logistics partners and be familiar with key safety features on the vehicle, such as a train’s braking system, to understand whether it can handle an emergency situation. Moreover, transportation companies also must understand the unique characteristics of the chemicals they’re carrying and their reactive properties while in transit.
                                  • The National Association of Chemical Distributors (NACD) is calling for freight rail companies and all Class I railroads to offer full, seven-day paid sick leave for their entire workforce, the trade association said in a February press release. While NACD applauded Norfolk Southern, CSX, and Union Pacific for reaching paid sick leave deals with some of their unions, it said more must be done to offer these benefits to all their unions and strengthen the chemical supply chain, which relies on freight rail to transport products. Paid sick time was a major sticking point in last year's contract negotiation between 12 rail unions and US freight railroads that nearly sent tens of thousands of railroad workers on strike. CSX Transportation in February announced that it had reached a deal with two railroad unions regarding paid sick leave, with Union Pacific and Norfolk Southern following suit soon thereafter.
                                  • The derailment of a 150-car-long freight train carrying toxic chemicals in February is calling attention to the dangers posed by increasingly long freight trains, Politico reports. The trend toward longer trains is a cost-saving effort by freight railroads that’s drawing scrutiny from the industry’s critics and regulators. “The longer the train, the heavier the train, the more wear and tear it puts on the actual rail itself, as well as the equipment,” said Jared Cassity, of the rail union SMART-Transportation Division. While the investigation is still in early stages, the National Transportation Safety Board has said preliminarily that an overheated wheel bearing on one of the cars is partially the culprit for the derailment, according to Politico. In a 2019 study, the Government Accountability Office said 150 cars is more than twice the average length of freight trains operated by major railroads from 2008 through 2017.
                                  • The February derailment of a Norfolk Southern train carrying toxic chemicals is likely to place renewed focus on rail safety, The Wall Street Journal reports. Vinyl chloride, butyl acrylate, ethylhexyl acrylate, and ethylene glycol monobutyl ether are known to have been released to the air, soil, and waters at the accident site in Ohio, according to the EPA. Chemical manufacturers rely heavily on rail for transporting products with freight railroads originating 2.2 million carloads of plastics, fertilizers and other chemicals in 2021, according to the Association of American Railroads. The chemical industry already was unhappy with the service provided by the nation's railroads prior to the accident, citing a lack of railcar availability and embargoes, among other issues. A spokesman for the American Chemistry Council said it’s too early to know what impact the derailment may have on the industry moving forward.
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