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The global third-party chemical distribution market size is estimated to grow at a CAGR of 7.6% between 2022 and 2027. The size of the market is forecast to increase by USD 121.73 million. The growth of the market depends on several factors, including a growing focus on chemical distribution, increasing emphasis on outsourcing distribution services, and rising demand for third-party chemical distribution from MEA and APAC.
One of the major challenges that are expected to impede the growth of the market includes adherence to stringent regulations by third-party chemical distributors operating in the market.
The third-party chemical distribution market is highly fragmented and localized, with the presence of many regional players such as Barentz International BV, Biesterfeld AG, BRENNTAG SE, HELM AG, and Jebsen. Several companies are using an M and A strategy to expand their geographical reach and increase market consolidation. Therefore, competition in the global chemical industry is intensifying, and vendors are seeking an edge by continually adapting to the changing marketplace to remain competitive globally.
This report extensively covers market segmentation by Type (commodity chemicals and speciality chemicals), Application (textiles, automotive and transportation, agriculture, pharmaceuticals, and industrial), and Geography ( APAC, Europe, North America, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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Key Third-Party Chemical Distribution Market Driver
The global third-party chemical distribution market is experiencing significant growth due to the increasing focus on chemical distribution. This is largely driven by the integration of modern technologies into the global chemical market, which has led to a rising demand for digitalization of the chemical distribution supply chain. With evolving customer expectations, businesses have had to adapt, resulting in increased adoption of digital technologies by both chemical manufacturers and distributors.
The use of digital technologies, such as the Internet of Things (IoT) and analytics, enables chemical manufacturers and distributors to analyze large amounts of data, automate processes, and empower their workforce. This helps to make the system more agile, optimize operations, comply with regulations, and develop innovative business models. Furthermore, the emergence of online commerce has opened up new opportunities for third-party chemical distributors to partner with digital retailers, further driving the need for their services. Therefore, various digitization solutions and initiatives are being implemented to meet these demands.
Significant Third-Party Chemical Distribution Market Trend
The global third-party chemical distribution market is set to benefit from an uptick in Mergers and Acquisitions (M&A). Consolidation resulting from a surge in M&A activity is an ongoing trend in the market, with a growing number of large international vendors acquiring smaller companies to expand their reach into new regions and fill gaps in their portfolios. As a result, chemical distributors are experiencing increased valuations, and manufacturers are able to maintain a direct relationship with their end-users, ensuring proper product usage.
The increase in M&A activity is also being driven by various industry regulations, such as compliance with lab standards and registration, evaluation, authorization, and restriction of chemicals (REACH) and classification, labeling, and packaging (CLP) regulations. These regulations are particularly challenging for small chemical distributors, which has led to an increase in M&A activity. Thus, the rising trend of M&A is expected to continue driving the growth of the global chemical distribution market during the forecast period.
Major Third-Party Chemical Distribution Challenge
The emergence of innovative distribution channels is a major challenge to the global third-party chemical distribution market growth. The advent of modern technologies and the direct sale of chemicals by chemical manufacturers to customers are major factors that will impede the growth of the market. Traditionally, chemical producers distribute their products themselves. Direct supply still accounts for about 90% of the total global distribution of chemicals across various end-user industries. In addition, the advent of modern technologies in the chemicals market further caters to the growth of this challenge.
For instance, technologies such as Blockchain enable smart contracts between chemical manufacturers and their end-users and enable auto-execution and validation of contracts, which results in the elimination of third-party intermediaries in the contract. Thus, the emergence of innovative distribution channels can become a major challenge for the growth of the global third-party chemical distribution market during the forecast period.
Key Third-Party Chemical Distribution Market Customer Landscape
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Third-Party Chemical Distribution Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Barentz - The company offers solutions for third-party chemical distribution and also supplies IT solutions to third-party enterprises. Also, the company provides solutions for human nutrition, pharmaceuticals, personal care, and animal nutrition.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the commodity chemicals segment will be significant during the forecast period. The commodity chemicals segment is expected to record a steady growth rate during the forecast period. Commodity chemicals are bulk chemicals that are used to manufacture an extensive range of end-user products, such as construction materials, adhesives, plastics, apparel, and tires. Commodity chemicals include polymers, petrochemicals, and basic inorganic chemicals and fertilizers; they generally have a lower manufacturing cost when compared to other chemicals. Commodity chemicals are mostly used in personal care products, the aerospace industry, and other industrial applications such as the manufacturing of plastics, synthetic fibers, synthetic rubber, fertilizers, pesticides, and others. The commodity chemical segment dominates the market as commodity chemicals are more widely used across all industries.
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The commodity chemicals segment showed a gradual increase in market share from USD 137.52 million in 2017 and continued to grow by 2021. Innovative service delivery methods, along with rising demand for the distribution of commodity chemicals in developing regions, are other major factors that are expected to drive the growth of this market segment. For instance, Brenntag uses a hub-and-spoke model wherein commodity chemicals are received in bulk quantities at Brenntag's hub locations, which have large tank farms, warehouses, and mixing and blending facilities. From the company hub, these chemicals are supplied to the 'spoke.' which comprises facilities that accommodate smaller tank farms and warehouses that are located near the customers to ensure prompt and smooth delivery. APAC is one of the major consumers of commodity chemicals due to the presence of a large number of manufacturing facilities in the region, which is driving the growth of the segment.
Textile chemicals are widely used in the processing of fabrics. Some main processes include dyeing, bleaching, printing, conditioning, and finishing. Textile finishing uses various finishing agents, such as water and oil repellants, antistatic agents, anti-slipping agents, flame retardants, wrinkle-resistant, antimicrobial agents, soil and dirt release and repellents, self-cleaning agents, and temperature regulation agents. Functional textile finishing agents are used to enhance the properties of fabrics and impart special functions to fabrics. For instance, antimicrobial finishes provide bacterial and fungal resistance to fabrics and kill odor-causing bacteria. The high demand for functional textiles in hospitals, offices, schools, and households is fueling the demand for functional finishing agents. The rising demand for functional textiles is expected to drive the demand for textile chemicals during the forecast period. This is expected to drive the growth of the textiles segment in the global chemical distribution market during the forecast period.
APAC is estimated to contribute 47% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The third-party chemical distribution market in APAC is expected to grow at a significant rate during the forecast period. The growing demand for the distribution and delivery of specialty chemicals, as well as commodity chemicals from various emerging economies in the region, is one of the major factors that cater to the growth of the market in the region. Countries such as China, Japan, South Korea, India, and Australia are the major contributors to the growth of the market in the region. Increased market potential due to the increased spending power of a rising middle class has been one of the prime factors that have attracted increased investments from third-party chemical distributors in the region.
The lockdown restrictions were lifted in the second half of 2020 owing to large-scale vaccination drives across APAC. This has resumed the production of chemicals in the manufacturing facilities since the first half of 2021. Moreover, the operations in the end-users industries of chemicals, such as automotive, agriculture, pharmaceuticals, electronics, and others, resumed in the first half of 2021. This is expected to increase the demand for chemicals for various applications in these end-user industries, which will drive the demand for chemical distribution services during the forecast period. Hence, the chemical distribution market in APAC is expected to grow during the forecast period.
The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. The market has been segmented by type, product, distribution channel, and region.
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Third-Party Chemical Distribution Market Scope |
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Report Coverage |
Details |
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Page number |
168 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 7.6% |
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Market growth 2023-2027 |
USD 121.73 million |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
6.92 |
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Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 47% |
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Key countries |
US, China, India, Germany, and UK |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Barentz International BV, Biesterfeld AG, BRENNTAG SE, HELM AG, ICC Chemical Corp., IMCD NV, Jebsen and Jessen Pte Ltd., Manuchar NV, Obegi Group, Omya International AG, Petrochem, Protea Chemicals, REDA Chemicals, Redox Ltd., Sea Land Chemical Co., Snetor SA, Stockmeier Holding GmbH, Tricon Energy Inc., Univar Solutions Inc., and Wilbur Ellis Holdings Inc. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Application
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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