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 7,500 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 are subject to regulations that govern storage, handling, and transportation.

Industry size & Structure

The average chemical distributor operates out of a single location, employs 21 workers, and generates about $23 million annually.

    • The chemical distribution industry consists of about 7,500 firms that employ about 150,500 workers and generate about $173 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

                                  May 20, 2024 - Sales Fall Amid Rising Labor Costs
                                  • Sales for chemical distributors fell 6% in March compared to a year ago but rose 5.2% over February amid rising producer prices, according to the latest US Bureau of Labor Statistics data. Meanwhile, employment by chemical distributors grew 2.5% in March year over year, while average wages increased by 8.4% over the same period to $35.10 per hour, within pennies of their peak in December, BLS data show. According to the Interindustry Economic Research Fund, sales for the US chemical distributors industry are forecast to grow at a 2.78% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy.
                                  • Chemical distributors looking to electrify their fleets will want to take note of a new analysis from Ryder showing that operating expenses of low-emissions rigs are far higher than those for diesel trucks, The Wall Street Journal reported in May. The truck leasing company found that as trucks get heavier, the difference in operating costs between battery-electric vehicles and diesel trucks grows more pronounced, with annual costs of operating battery-electric big rigs about twice as expensive as diesel trucks, per Ryder’s analysis. Because battery-electric trucks are heavier than diesel trucks and require several hours to recharge, companies need more vehicles and drivers to haul the same volume of freight as a diesel truck. The Ryder analysis estimated that a company would need nearly two battery-electric big rigs and more than two drivers to equal the output of a single heavy-duty diesel truck, WSJ reports.
                                  • US output of basic chemicals fell 2.5% in 2023, with declines in petrochemicals and organic intermediates, synthetic rubber, and manufactured fibers output, according to the American Chemistry Council’s Year-End Situation & Outlook. The council expects a “modest recovery” across all chemical segments in 2024, with overall chemistry output expected to increase by 1.5%, after an “unprecedented” destocking cycle that began in the third quarter of 2022 and continued throughout much of 2023, curbing production. Longer-term, the outlook for the US chemicals industry is positive, with the natural gas liquids feedstock advantage continuing to favor domestic production for the foreseeable future. Moreover, capacity expansions in customer industries will support the industry going forward, ACC maintains. “Because of the chemical industry’s early position in the supply chain, we would expect to see a turnaround in chemicals before improvement in the broader economy,” said ACC chief economist Martha Gilchrist Moore.
                                  • Chemical distributors that operate their fleets can reduce the cost of fleet ownership by optimizing operational efficiency using advanced trailer telematics, according to fleet management provider Road Ready. Beyond location tracking, advanced trailer telematics (ATT) systems enhance fleet management, improve security and profitability, and stay ahead of maintenance issues. ATT systems use onboard hardware and software to collect, analyze, and interpret the data from the trailer, providing real-time insight into its location, condition, and performance. ATT systems use mobile-wireless networks to broadcast data from the trailer to the cloud via a mobile communications unit onboard each trailer. Sensor technologies monitor lights, brakes, and tires, including tire inflation and wheel-end temperature, to ensure peak performance and prevent blowouts and failures that could result in chemical spills. While installing ATT systems can be complex and requires investment, it isn’t a sunk cost considering the down-the-road payoff, per Road Ready.
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